Opportunity zone

An opportunity zone is a geographic area in the United States where investments are exempt from Captial Gains tax. The concept of opprtunity zone was introduced in the Tax Cuts and Jobs Act of 2017 by the Trump administration. They are similar to Enterprise zones, a concept introduced in the 1980s in the United Kingdom.

In the United Kingdom enterprise zones were meant to make it easier for people living living there to start a business and to provide tax incentives to encourage locals to invest in them.

In the United States empowerment zones were introduced in 1993 to allow local governments to compete for grants and tax incentives. The 2017 law allows state governors to designate up to 25% of low-income census tracts in their state as opportunity zones. There are 8,700 opportunity zones in the United States. They cover 35 million Americans. Investors in those zones can defer capital gains tax until 2026. This helps investors lower their tax burden.