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Notice 2026-40: Intent to issue proposed regulations regarding qualified opportunity zones (QOZs) under sections 1400-1 and 1400Z-2

As amended by the “One, Big, Beautiful Bill Act” (OBBBA)

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June 18, 2026

The IRS today released Notice 2026-40, announcing that the Treasury Department and IRS intend to issue proposed regulations regarding QOZs under sections 1400Z-1 and 1400Z-2, as amended by the “One, Big, Beautiful Bill Act” (OBBBA), including transitional guidance related to qualifying investments under sections 1400Z-1 and 1400Z-2, as in effect prior to amendment by the OBBBA.

In particular, Notice 2026-40 provides transitional guidance:

  • Under section 1400Z-1 regarding QOZ designations under the OBBBA
  • For investors regarding:
    • Gain realized on or before December 31, 2026, and invested in a qualified opportunity fund (QOF) on or before December 31, 2026, or on or after January 1, 2027
    • Eligibility of inclusion event gain
  • For QOFs and qualified opportunity zone businesses (QOZBs) regarding:
    • Tangible property acquired after December 31, 2026, for use in a tract that was designated as a QOZ under the Tax Cuts and Jobs Act but not designated as such under the OBBBA
    • Compliance tests after a QOZ designation period ends

It is expected that the final regulations adopting the forthcoming proposed regulations will apply to tax years ending after today, the day Notice 2026-40 was released to the public.

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The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

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