Gov. John Bel Edwards has nominated 150 census tracts in Louisiana for federal certification as Opportunity Zones, which will feature federal tax incentives to attract investment to low-income communities in the state. Part of the federal Tax Cuts and Jobs Act of 2017, the Opportunity Zones program will establish low-income communities as tax-advantaged areas for new long-term private investment.
The U.S. Department of the Treasury, which is administering the program, will review and act upon the tracts nominated by Louisiana. Gov. Edwards and Louisiana Economic Development worked with local, parish and state elected officials – as well as community and economic development organizations, private developers and citizens – to compile a list of low-income communities throughout Louisiana that offer significant potential for development.
“Opportunity Zones represent another chance to enhance Louisiana’s quality of life and business climate by providing more reasons to invest in our state and our people,” Gov. Edwards said. “We conducted a public comment period in March and applied extensive analysis to this selection process. The result will be communities and properties we can be proud to offer as attractive locations to investors. We will encourage our banks and investment community, as well as our local governments and financing authorities, to join us in attracting investment to Louisiana communities that need it most.”
With public input, Gov. Edwards nominated the maximum 25 percent of Louisiana’s nearly 600 low-income census tracts for inclusion in the Opportunity Zones program. Final action by the federal Treasury Department is needed to certify the nominated tracts as Opportunity Zones. The Treasury Department also will issue additional guidance about how investors may qualify for the program through equity investments in the selected Opportunity Zones.
Beginning today, the public may view Louisiana’s nominated low-income census tracts on an interactive map. Visit OpportunityLouisiana.com/business-incentives/opportunity-zones
and follow the instructions to access the map. Upon viewing the map application, users may find information about each zone and the political subdivisions in which they are located.
Congress and the Treasury Department advised governors to consider lower-income areas where existing state, local and private economic development initiatives are underway to attract new investment and to foster startup activity. These zones can include previously designated Empowerment Zones, Renewal Communities, or New Markets Tax Credits project areas.
The primary attraction for investing in Opportunity Zones is deferring and lowering federal taxes on capital gains. For a qualified Opportunity Zones investment, capital gains taxes may be deferred the first five years; after Year 5, taxes may be cancelled on 10 percent of the original capital gains investment and deferred for the remainder; in Year 7 through Year 10, taxes may be cancelled on 15 percent of the original capital gains investment, and the remainder may be deferred through 2026; for Opportunity Zones investments lasting longer than 10 years, investors are exempt from capital gains taxes on the Opportunity Zones investment itself, in addition to the other benefits for capital gains carried into the investment.