One, Big, Beautiful Bill provisions – Investment and community development
Rural Opportunity Zones (Section 70421)
Overview of Opportunity Zones
In 2018, certain economically distressed census tracts in the United States and its territories were designated as Qualified Opportunity Zones (QOZs) by the Treasury Department
Taxpayers investing in QOZs receive certain tax benefits as an incentive to support economic growth and job creation in these underserved communities
Rural area definition under the One, Big, Beautiful Bill Act
A rural area is any area other than a city or town with a population greater than 50,000, and any urbanized area contiguous and adjacent to such a city or town
This definition applies to states, the District of Columbia and U.S. territories
Changes to substantial improvement requirements
Beginning July 4, 2025, The Act reduced the substantial improvement threshold from 100 percent to 50 percent for required additions to the basis for property located entirely in rural QOZs
Related resources
IRS Opportunity Zones guidance makes investments in rural areas more attractive for real estate investors (Ready-to-use article, Jan. 21, 2026)
Enhanced tax incentives for Qualified Opportunity Zone investments in rural areas (IRS Tax Tip 2026-04)
Rural Opportunity Zone investment guidance (IR-2025-96)
Qualified Opportunity Zones
Tax benefit for agricultural and rural lending (Section 70435)
Overview of the tax benefit
A new provision, Internal Revenue Code Section 139L, allows eligible lenders to exclude 25% of interest income from federal taxable income
The benefit applies only to interest earned on qualifying loans
Lenders must still include the remaining 75% of interest income in taxable income
Who qualifies
The benefit is available to qualified lenders, which generally include:
U.S. banks and savings associations
Certain regulated insurance companies
Farm Credit System institutions
Other lenders that meet IRS eligibility requirements
What counts as a qualified loan
To qualify for the tax benefit, a loan must:
Be secured by farm or rural real property
Involve property primarily used for agricultural or rural purposes
Be made on or after July 4, 2025
Be secured by the property itself (not based only on how loan funds are used)
The guidance also explains how refinanced loans and property value limits are handled.
Call for comments
The IRS is requesting public comments on this guidance through www.regulations.gov or by mail. Final regulations will be issued after the comment period.
Related resources
Tax benefit for lenders on loans secured by farm or rural property (IR-2025-113)
Treatment of capital gains from the sale of certain farmland property (Section 70437)
Overview of the tax benefit
For tax years beginning after July 4, 2025, taxpayers can elect to pay the net income tax attributable to the gain from the sale or exchange of qualified farmland property to a qualified farmer (qualified sale or exchange) in four equal annual installments.
The first installment payment is due on the due date (without extension) of the return for the year of the qualified sale or exchange.
Available to both individuals and business entities. If a partnership or S corporation has a qualified sale or exchange, then the election is made at the partner or shareholder level.
Definition of qualified farmland property
Qualified farmland property is defined as real property located in the United States that has been used by the taxpayer either as a farm for farming purposes or leased by the taxpayer to a qualified farmer for farming purposes.
The property must have been used or leased by the taxpayer during substantially all of the 10-year period ending on the date of the qualified sale or exchange.
The property must be subject to a covenant or other legally enforceable restriction which prohibits the use of such property other than as a farm for farming purposes for 10 years after the date of the qualified sale or exchange.
Definition of qualified farmer
As noted, the purchaser must be a qualified farmer, which is any individual who is actively engaged in farming (within the meaning of 7 U.S.C. §§ 1308-1(b) and (c)).
Related resources
IRC section 1062, Gain from the Sale or Exchange of Qualified Farmland Property to Qualified Farmers
Notice 2026-03 PDF, Relief from Additions to Tax under Sections 6654 and 6655 for Underpayment of Estimated Income Tax by Taxpayers Making an Election under Section 1062
Agriculture Tax Center
