Maryland Opportunity Zones

In a nutshell, the Opportunity Zone Program is an investor tool to incentivize investments in projects and areas that may not otherwise be sufficiently attractive to investors. Here is how it works in a nutshell:                                  

• Step 1: An individual or institution realizes a capital gain by selling an asset that increased in value, triggering a taxable event.
• Step 2: If that realized capital gain is invested in a Qualified Opportunity Fund within 180 days, the taxes on that capital gain are deferred for up to 5 years.
• Step 3: If the investment is held in the fund for at least 5 years, the capital gain tax amount due is discounted by 10% for a standard Opportunity Zone and 30% for a Rural Opportunity Zone.
• Step 4: The big one - If the investment is held in the Qualified Opportunity Fund for at least 10 years, the capital gains earned are entirely exempt from federal and state capital gains taxes.

On April 6, 2026, the Internal Revenue Service (IRS) provided guidance to states on submitting Opportunity Zone 2.0 designations.

Eligibility for OZ 2.0 has been altered and will now be based on a census tract meeting one of two definitions for a "low-income community."                                  

Low-income community designation:                                  

1. Poverty rate: The census tract had a poverty rate of at least 20% and less than 125% of state/metro MFI
2. Median family income: The median family income of the census tract did not exceed 70% of the state or area median family income, whichever was greater.

Maryland may designate 113 census tracts as Opportunity Zones.