Economic Opportunity Zones (EOZs) were implemented to increase investment in disadvantaged areas.
EOZ programs have increased investment in a small number of EOZs.
EOZs have an unclear impact on jobs, real estate, and communities.
Economic Opportunity Zones (EOZs) were created by the Tax Cuts and Jobs Act of 2017 to spur economic growth and job creation in low-income communities while providing tax incentives to investors (HR 1 2017, IRS 2025). EOZs are economically distressed communities defined by individual census tracts, nominated by governors, and certified by the U.S. Secretary of the Treasury (HUD 2025). To be an EOZ, a census tract must have:
Special consideration is given to rural counties with high (>10%) emigration rates (MO DED 2025). Research suggests that while EOZ designation by governors is overall data-driven, political representation by the same party as the governor is positively associated with EOZ nomination (Alm et al 2020). Relatedly, areas with Democratic representation are negatively associated with EOZ nomination. In addition, developers and investors can lobby for tract nomination, leading to the designation of EOZs in areas where investment is already occurring, and qualifying these existing investments for tax exemptions (Trivedi 2021).
Opportunity Funds are investment vehicles organized as corporations or partnerships that hold at least 90% of assets in qualified EOZs and exist for the purpose of investing in EOZs (MO DED 2025). Investments made into Opportunity Funds are eligible for tax deferral or exemptions.
Early research indicates that the average annual income of an EOZ investor is $4.9 million (Kennedy & Wheeler 2021). Likewise, investments tend to be concentrated in areas with higher incomes, home values, educational attainment, and pre-existing income and population growth (Coyne & Johnson 2022, Alm et al 2020). In 2019, the top funded 1% of zones received almost half of all investments, and the top funded 5% of zones received almost 80% of investments (Kennedy & Wheeler 2021, Figure 1). Similarly, urban zones received 95% of investments, although they also make up 86% of EOZs (Coyne & Johnson 2022).
States with the highest share of investors were CA, CO, CT, NJ, NY, NV, and UT, while states with the highest share of investment were AZ, CO, DC, OR, and UT (Kennedy & Wheeler 2021). AL, IA, IL, KS, and NM had the lowest share of investments.
Initial research saw an increase in employment in some EOZs from 2017 through 2021, though not for residents of the EOZ (Arefeva et al 2024). Another study found no increase in job postings, while another found no effects on employment, earnings or poverty rates (Atkins et al 2021, Freedman et al 2021). In addition, research has not found an increase in new business formation, loans, venture capital investment, commercial diversity, or consumer spending in EOZs (Feldman & Corinth 2023, Eldar & Garber 2022).
Similarly mixed results appear in real estate trends. While some studies found that residential, commercial, and vacant land prices increased, others found no change in single family home prices, the amount of home or small business lending, or the number of real estate transactions (Bekkerman et al 2024, Chen et al 2023, Feldman & Corinth 2023, Snidal & Li 2022, Sage et al 2021).
Figure 1. The percentage of spending in economic opportunity zones. The percentage of EOZs (left) and corresponding funding (right) where 5% of EOZs received 78% of funding (yellow), and the remaining 95% of EOZs shared 22% of funding (blue).
References
Alm J, Dronyk-Trosper T, Larkin S (2020) In the land of OZ: designating opportunity zones. Public Choice. 188: 503-523. https://doi.org/10.1007/s11127-020-00848-9
Arefeva A, Davis MA, Ghent AC (2024) The Effect of Capital Gains Taxes on Business Creation and Employment: The Case of Opportunity Zones. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3645507
Atkins RMB, Hernandez-Lagos P, Jara-Figueroa C, Seamans R (2021) What is the Impact of Opportunity Zones on Employment? SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3673986
Bekkerman R, Cohen MC, Liu X, Maiden J, Mitrofanov D (2024) The Impact of the Opportunity Zone Program on Residential Real Estate. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3780241
Chen J, Glaeser E, Wessel D (2023) JUE Insight: The (non-) effect of opportunity zones on housing prices. Journal of Urban Economics. 133. https://doi.org/10.1016/j.jue.2022.103451
Coyne D, Johnson CE (2022) Use of the Opportunity Zone Tax Incentive: What the Tax Data Tell Us. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4308263
Eldar O, Garber C (2022) Opportunity Zones: A Program in Search of a Purpose. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4160092
Feldman N, Corinth K (2023) The Impact of Opportunity Zones on Commercial Investment and Economic Activity. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4086056
Freedman M, Khanna S, Neumark D (2021) The Impacts of Opportunity Zones on Zone Residents. NBER. https://www.nber.org/system/files/working_papers/w28573/revisions/w28573.rev0.pdf
House Resolution (HR) 1 (2017) An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018. 115th Congress. https://www.congress.gov/bill/115th-congress/house-bill/1/text
Housing and Urban Development (HUD) (2025) Opportunity Zones. Opportunity Now. https://opportunityzones.hud.gov/
Internal Revenue Service (IRS) (2025) Opportunity Zones. https://www.irs.gov/credits-deductions/businesses/opportunity-zones
Kennedy P, Wheeler H (2022) Neighborhood-Level Investment from the U.S. Opportunity Zone Program: Early Evidence. SSRN. https://dx.doi.org/10.2139/ssrn.4024514
MO Department of Economic Development (DED) (2025) Opportunity Zones. https://ded.mo.gov/programs/business-community/opportunity-zones
Sage A, Langen M, Van de Minne A (2021) Where Is the Opportunity in Opportunity Zones? SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3385502
Snidal M, Guanglai L (2022) The Nonimpact of Opportunity Zones on Home and Business Lending. Housing Policy Debate. 34(3). https://doi.org/10.1080/10511482.2022.2145852
Trivedi RR (2021) Opportunity Zones Providing Opportunity for Whom?: How the Current Regulations Are Failing and Solution to Uplift Communities. Washington and Lee Journal of Civil Rights and Social Justice, 27(2): 745-789. https://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?article=1523&context=crsj
