New Tax Benefits for Investing in Rural Opportunity Zones Under the One, Big, Beautiful Bill

The One, Big, Beautiful Bill (OBBB) has introduced important updates for taxpayers interested in Qualified Opportunity Zone (QOZ) investments—especially in rural areas. These changes create new tax incentives for investors and business owners while supporting economic growth in underserved communities.

At Velin & Associates, Inc., we’re committed to helping our clients — from YouTubers and Shopify sellers to doctors, dentists, and high net worth individuals — understand how these updates may create powerful tax planning opportunities.

What Are Opportunity Zones?

Opportunity Zones were first introduced in 2018 as part of a federal program to attract long-term investment into economically distressed communities. Investors who put capital into these areas may receive benefits such as:

• Deferral of capital gains taxes
• Reduction of tax owed on reinvested gains (if held long enough)
• Potential tax-free appreciation on qualifying investments

Until now, many QOZ investments were concentrated in urban settings. The new law changes that.

What’s New Under the OBBB

Notice 2025-50 introduces two key updates:

1. Expanded Definition of “Rural Area”

A rural area is now defined as:

• Any location outside a city or town with a population greater than 50,000, and
• Any area not directly adjacent to such cities.

This opens the door to more rural communities qualifying for Opportunity Zone investment.

2. Lower “Substantial Improvement” Threshold

Previously, investors had to double the property’s basis (100% improvement) to qualify under the program.

As of July 4, 2025, if the property is in a rural QOZ, that requirement drops to 50%.

👉 This makes it far easier and less costly to qualify for Opportunity Zone tax incentives in rural markets.

Why This Matters for Investors and Business Owners

Out of 8,764 designated QOZs in the U.S., the IRS has identified 3,309 as entirely rural. These areas have historically struggled to attract funding, but now investors have a lower bar to entry and greater tax advantages.

Example Scenarios:

• If you are a YouTuber in Los Angeles with significant capital gains from selling ad rights or content libraries, you could reinvest those gains into a rural Opportunity Zone real estate project. Instead of owing immediate capital gains tax, you may defer or even reduce your tax liability.
• If you are an Amazon Business Owner with strong cash flow, you could diversify into a warehouse project located in a rural QOZ. Thanks to the 50% improvement rule, your upfront investment requirements are lower, while still qualifying for tax benefits.
• If you are a Dentist expanding your practice, investing in property within a rural Opportunity Zone could open the door to tax-free appreciation on that real estate investment if held long enough.
• If you are a High Net Worth Individual with large stock gains, reallocating part of your portfolio into a QOZ fund targeting rural development may provide both tax efficiency and long-term wealth growth.

Strategic Tax Planning Opportunities

These updates are especially valuable for:

• Creators and online professionals (YouTubers, TikTokers, Filmmakers, Shopify Store Owners) who may face large capital gains from brand deals, digital asset sales, or company exits.
• Doctors and medical practices considering expanding facilities into underserved areas.
• Investors seeking diversification with tax advantages.

The lowered threshold makes rural projects more accessible, while the long-term tax-free growth potential remains one of the most powerful incentives in the tax code.

Final Thoughts

The Opportunity Zone program has always been about blending investment with community development. With these new changes, investing in rural areas has become more attractive and financially efficient than ever before.

At Velin & Associates, Inc., we help clients navigate complex tax rules and identify strategies that align with their financial goals. Whether you’re a creator, business owner, or high net worth investor, we can guide you through the Opportunity Zone process and ensure your investments are both compliant and tax-efficient.

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org