News / Rule changes
IRS Notice 2025-50: lower substantial-improvement threshold in fully rural zones
What changed and who it affects: Confirms that for property in a current zone made up entirely of a rural area, substantial improvement now needs more than 50% of basis instead of 100%, effective July 4, 2025, and lists 3,309 such zones. Affects developers and funds improving property in rural zones.
Notice 2025-50 defines "rural area" and applies the reduced substantial-improvement threshold enacted in Public Law 119-21: required additions to basis drop from 100 percent to 50 percent for property in a QOZ comprised entirely of a rural area, effective July 4, 2025.
Per the IRS release (IR-2025-96, Sept. 30, 2025), the notice identifies 3,309 of the 8,764 current QOZs as comprised entirely of a rural area. It does not address the new round of nominations.
Primary sources
On Opportunity Zone Invest
- Guide: tax benefits
Checked against the source on October 14, 2026. This page summarizes the official document; it is not tax advice.