The “One Big Beautiful Bill Act of 2025” and OZ 2.0

Legislative Frameworks & OZ 2.0

The “Goldilocks” Tract Framework

For the 2026 selection process, the Urban Institute designates “Goldilocks” tracts—these are census tracts possessing both considerable economic requirements and genuine market conditions apt to draw in investment. This stops states from choosing areas that suffer from severe hardship but lack any capacity for investment.

Drastic Mapping Methodology Changes

• Removal of the “Contiguous Tract” Rule: Affluent neighboring tracts are no longer able to be included in the initiative.
• 70% MFI Threshold: The required median family income (MFI) benchmark has been reduced from 80% to 70%. This change is projected to lead to an approximate 20-25% decrease in the overall number of eligible tracts, thereby excluding urban areas undergoing gentrification and elevating the proportional importance of rural regions.

The “Double-Eligible” Overlap

During the transition phase (2027–2028), a two-tiered map is established, comprising existing OZ 1.0 zones and newly designated OZ 2.0 zones. In instances where these areas coincide, investors discover “Double-Eligible” properties, which signify the most secure long-term investments, safeguarded against the termination of regulations.

Enhanced Rural Incentives

To counteract regional imbalance, rural OZ 2.0 investments include:

• A reduced “substantial improvement” requirement: developers are only obligated to enhance the property by 50% of its basis, instead of 100%.
• A significant 30% basis step-up after year five, as opposed to the typical 10%.