News / Rule changes
IRS Notice 2026-40: transitional guidance from the original zones to OZ 2.0
What changed and who it affects: Announces planned proposed regulations and transition rules for investments and projects that straddle the switch from the original zones to OZ 2.0. New zones run January 1, 2027 to December 31, 2036. Affects existing QOF investors and projects in current zones.
Notice 2026-40 says Treasury and the IRS intend to issue proposed regulations under sections 1400Z-1 and 1400Z-2 as amended by Public Law 119-21, including transitional guidance for investments under the prior rules.
For tracts certified and designated under the new process in 2026, the designation period begins January 1, 2027 and ends December 31, 2036.
It also describes safe harbors that let certain businesses keep testing an expired original zone as if it were still a QOZ for limited purposes through December 31, 2047.
The IRS issued the notice June 18, 2026; it appears in Internal Revenue Bulletin 2026-28.
Primary sources
On Opportunity Zone Invest
- Guide: oz investing january 2027
Checked against the source on October 14, 2026. This page summarizes the official document; it is not tax advice.