Governor Dunleavy will decide by late September 2026 which Alaska census tracts—many covering lands owned by Alaska Native Corporations—participate in the federal Opportunity Zone program. These choices will remain in place for the next ten years. For ANCs, this is a once-in-a-decade opportunity to position their lands for major private investment with significant federal tax benefits.

• Why ANCs Should Pay Attention:
• • About 72% of Alaska’s current Opportunity Zones (“OZ”) qualify as “rural” under the new law—meaning investments in ANC lands can receive enhanced tax benefits that attract capital other regions cannot match.
  • OZ 2.0 is now permanent law. The One Big Beautiful Bill Act (“OBBBA”), signed into law on July 4, 2025, made the program a permanent part of the Internal Revenue Code. OZ 2.0 starts on January 1, 2027. Investors can defer, reduce, and in some cases eliminate capital gains taxes by investing in qualified projects—and rural zones like those in Alaska get the best deal.
  • ANCs can join Qualified Opportunity Funds by contributing land, leases, or development rights—unlocking outside capital for infrastructure, housing, resource development, and other community priorities.
  • State governors have a 90-day window beginning July 1, 2026, to submit census tract nominations to the U.S. Treasury (deadline: September 28, 2026, with one 30-day extension available). The Governor will gather input from local governments, tribes, developers, and investors before finalizing Alaska’s selections. Communities that engage early with the Governor’s office will have the best chance of getting their lands on the map.

What Are Opportunity Zones?

Opportunity Zones were created by the Tax Cuts and Jobs Act of 2017 to boost economic growth in low-income communities by offering tax incentives to investors who channel capital gains through Qualified Opportunity Funds (“QOFs”). The program has attracted over $100 billion nationwide, funding real estate, operating businesses, and community infrastructure across 8,764 census tracts.

The Three Core Tax Benefits

Investors get three main tax benefits— defer the tax, shrink the taxable amount, and after 10 years, pay zero tax on new gains. Rural investments (like those in Alaska) get the best version of these benefits.

1. Delay Paying Taxes on Capital Gains. Investors can put off paying taxes on eligible capital gains by reinvesting them into a QOF. Under OZ 2.0, this delay lasts up to five years. The deferred gain becomes taxable when either (a) the investor sells or exchanges the QOF interest, or (b) five years pass from the investment date—whichever comes first.
2. Up to 30% Reduction in Taxable Gain. If an investor holds a Qualified Rural Opportunity Fund (“QROF”) investment for at least five years, the taxable amount of the deferred gain drops by 30%. (Non-rural QOF investments only get a 10% reduction.) For example, an investor who defers a $500,000 gain would only owe taxes on $350,000 after meeting the five-year holding requirement.
3. No Tax on New Gains After 10 Years. If an investor holds a qualifying QOF investment for at least 10 years, they can choose to step up the investment’s tax basis to fair market value. This means all appreciation earned after the investment is completely tax-free. This applies no matter how the gain is realized—whether through a sale, exchange, or public offering. Under OZ 2.0, this benefit continues on a rolling 30-year basis with an automatic step-up at year 30.

The 10-Year Designation Cycle and the July 2026 Nomination Process

Zone designations last 10 years. Governor Dunleavy must submit Alaska’s choices by late 2026. Those selections will stay in place through 2036. This is a big change from OZ 1.0, which was a temporary program. Here are the key parts of the new system:

• 10-Year Designation Periods. Under OZ 2.0, each set of Opportunity Zone designations stays in effect for 10 years. The current OZ 1.0 zones expire on December 31, 2026. The first OZ 2.0 zones will run from January 1, 2027, through December 31, 2036. Future cycles will follow the same 10-year pattern.
• Better Benefits for Rural Areas. OZ 2.0 created the Qualified Rural Opportunity Fund (“QROF”) label for funds that invest at least 90% of their money in Opportunity Zones located entirely in rural areas. QROFs get a 30% tax basis increase at five years (compared to 10% for non-rural funds) and easier requirements for improving existing property.
• Lower Improvement Requirements for Rural Zones. Under OZ 1.0, an investor buying existing property in an Opportunity Zone had to spend an amount equal to 100% of the property’s purchase price on improvements within 30 months. Under OZ 2.0, this drops to 50% for property in rural Opportunity Zones. This change started on July 4, 2025.

Eligibility Requirements

Investors must reinvest capital gains into a Qualified Opportunity Fund within 180 days. The fund must keep 90% of its assets in qualifying property, and businesses must actively operate in the zone.

Eligible Investors. To benefit from OZ tax incentives, an investor must have U.S. capital gains tax liability. The investor invests eligible capital gains into a QOF within 180 days of realizing the gain.

Qualified Opportunity Funds (QOF). QOFs are self-certifying investment vehicles organized as corporations or partnerships for the purpose of investing in Qualified Opportunity Zone property other than another QOF. A QOF generally must hold at least 90% of its assets in Qualified Opportunity Zone property, measured by averaging the percentage of Qualified Opportunity Zone property held on two semiannual testing dates during the taxable year. Failure to satisfy the 90% investment standard may result in a statutory penalty unless the failure is due to reasonable cause. QOF status is obtained and maintained by annually filing IRS Form 8996.

Qualified Opportunity Zone Business (“QOZB”). A business getting QOF investment usually must qualify as a QOZB. To qualify, a QOZB must actively run a business within an Opportunity Zone, earn at least 50% of its gross income from activities in the zone, and use at least 70% of its physical property there. A large portion of the business’s intangible property (like patents or trademarks) must also be used in the business within the zone. QOZBs generally cannot hold large amounts of passive financial assets. However, cash set aside under a written development or construction plan may qualify for a 31-month safe harbor. Multiple investments can qualify for separate safe-harbor periods, letting large projects roll out funding over an extended timeline. Certain businesses are excluded, including liquor stores, gambling establishments, golf courses, and other “sin businesses.” Businesses that mainly hold passive investments or too much non-qualifying financial property don’t qualify. And real estate with triple-net leases doesn’t count as an active business for QOZB purposes.

Reporting and Compliance. OZ 2.0 adds new reporting requirements for QOFs and QOZBs. These include yearly disclosures, reports on community impact, and compliance certifications. QOFs must keep meeting annual reporting rules and ongoing asset tests to stay qualified.

ANCs and Rural Opportunity Zones

Much of ANC-owned land falls within designated Opportunity Zones. ANCs can collaborate with investors to fund infrastructure, housing, and business development while meeting their community benefit duties.

QOFs can invest in businesses and property located in these zones, including tribally owned businesses. The Bureau of Indian Affairs has called Opportunity Zones “an important new tool to attract investment for a wide range of projects to improve economic conditions on tribal lands.”

The census tracts that Governor Dunleavy nominates during the 90-day window starting in July 2026 will set Alaska’s Opportunity Zone map through December 31, 2036. Treasury Notice 2025-50 found that about 72% of Alaska’s current Opportunity Zones qualify as “rural areas” under OZ 2.0. Under the OBBBA, a “rural” area is any place outside (1) a city or town with more than 50,000 people, and (2) any urban area next to such a city or town.

How Investors Can Participate in Alaskan Opportunity Zones+–

Investors from anywhere in the U.S. can put money into Alaska Opportunity Zones—they don’t need to live here or have any prior Alaska connection. That opens a nationwide pool of capital.

Investor Location Does Not Matter. The OZ program is location-agnostic for investors. An investor in New York, California, Texas, or any other state can invest in a Qualified Opportunity Fund targeting rural Alaska without maintaining any physical presence in Alaska. The investor’s only connection to Alaska is through the fund’s underlying investments in designated Opportunity Zones within the state.

How to Invest. Investors participate in the OZ program by investing capital gains into a QOF. A QOF is a partnership or corporation that self-certifies its status by filing IRS Form 8996 with its annual tax return. QOFs targeting rural Alaska may be structured as private equity funds, real estate syndications, or direct investment vehicles. Opportunity Funds are not subject to a statutory minimum investment requirement; instead, minimum investment thresholds are established by each fund’s governing and offering documents.

Critical Timing Requirement. To qualify for OZ tax benefits, an investor must reinvest eligible capital gains into a QOF within 180 days of the date the gain is realized (e.g., the sale date for stock or real estate). Missing this deadline disqualifies the gain from OZ treatment.

Extra Tax Benefits for Rural Alaska Investments (QROF). Investors who put capital gains into a QROF—a QOF that invests at least 90% of its assets in Opportunity Zones located entirely within rural areas—get the enhanced OZ 2.0 benefits described in Section B above.

Due Diligence Considerations. Investors looking at QROF investments in rural Alaska should consider: (1) whether the target area is on the OZ 2.0 map (finalized late 2026 and fixed through December 31, 2036); (2) whether the project meets active business requirements (at least 50% of income from work done in the zone, at least 70% of physical property used in the zone); (3) whether the project sponsor has the capacity and structure to carry out the project over the 10-year holding period; (4) the fund’s compliance procedures, including yearly IRS Form 8996 filings, third-party audits, and plans for fixing any qualification problems; and (5) investment risks, including lack of liquidity (OZ investments usually require a 10-year hold to maximize benefits), construction risk, regulatory risk (including possible changes to OZ rules), and Alaska-specific challenges like remote locations, seasonal access limits, and higher construction costs.

• Types of investments that could qualify in rural Alaska Opportunity Zones include:
• • Infrastructure and logistics projects—ports, marine freight facilities, bulk fuel storage, broadband, water and wastewater systems, workforce housing, and renewable energy projects serving rural communities.
  • Real estate development—commercial, industrial, mixed-use, hospitality, healthcare, and residential projects. Existing buildings may qualify if they’re substantially improved to meet Opportunity Zone requirements.
  • Natural resource and value-added industries—seafood processing, cold storage, timber processing, and infrastructure supporting responsible resource development.
  • Joint ventures with ANCs—for example, a QROF providing investment money while an Alaska Native Village Corporation provides land, a ground lease, development rights, infrastructure, or cash—as long as the resulting business meets QOZB requirements.
  • Investments in operating businesses—including transportation, logistics, tourism, healthcare, energy services, manufacturing, and other businesses that qualify as QOZBs on their own.
  • Redevelopment and expansion projects—including the rehabilitation, modernization, or expansion of existing facilities. In rural Opportunity Zones, property can generally qualify if spending on improvements exceeds 50% of the property’s purchase price within the 30-month improvement period.

Key Dates and Resources

The nomination window opens July 1, 2026. New designations take effect January 1, 2027, and last through 2036.

Current OZ Map (Alaska): https://gis.data.alaska.gov/datasets/DCCED::alaska-qualified-opportunity-zones/about

HUD Opportunity Zones Information: www.hud.gov/opportunity-zones

This article summarizes aspects of the law and does not constitute legal advice. For legal advice with regard to your situation, you should contact a lawyer.