Opportunity Zones

Opportunity Zones became part of the federal tax code by way of the Tax Cuts and Jobs Act on December 22, 2017. An Opportunity Zone is an economically-distressed Census Tract where new investments, under certain conditions, may be eligible for preferential tax treatment with regard to capital gains tax liability.

Designated Census Tracts

The six (6) designated Census Tracts in Worcester, for the purposes of this initiative, are as follows:

  • This tract is generally bounded by Salisbury Street, Grove Street and Indian Lake to the west, Belmont Street (Lincoln Square) to the south, I-290 and the railroad tracks to the east and Shore Drive to the north. It is a portion of North Worcester, including major commercial corridors such as Gold Star Boulevard and much of West Boylston Street.

  • This tract is generally bounded by Main Street to the northwest, Crystal Street to the west, the Providence and Worcester railroad tracks to the southeast and Hermon Street to the northeast. It includes a portion of the Main South neighborhood. Part of this area has also been designated as a Transformative Development Initiative (TDI) District by MassDevelopment.

  • This tract is generally bounded by May Street to the southwest, Mayfield Street (across Park Avenue) to the northwest, Chandler Street to the northeast and Main Street to the South East. Much of the area is known locally as the Village of Piedmont.

  • This tract is general bounded by Irving/Lancaster Street to the west, Highland Street (Lincoln Square) to the north, Summer Street/I-290 to the northeast, the Providence and Worcester railroad tracks to the southeast and Hermon Street to the southwest. It is known locally as the Central Business District, or Downtown.

  • This tract is generally bounded by Quinsigamond Avenue to the south and west, I-290 to the east and the Providence & Worcester railroad tracks to the north. Much of the area is known locally as the Canal District and Green Island. A portion of this area is also part of the City's adopted Urban Revitalization Plan.

  • This tract is generally bounded by the Worcester-Millbury town line to the southeast, the Worcester-Shrewsbury town line to the northeast, Sunderland Road to the north and Massasoit Road to the west. It includes a significant part of Route 20, and a portion is known locally as Grafton Hill.

Note: the numerical representations of the areas identify the local Census Tract number. When expressed in a federal context, those numbers are preceded by the Massachusetts state code (25) and Worcester County code (027). Example 7305.00 is officially expressed as 25027730500.

For official Census Tract maps and boundaries, please visit www.census.gov.

Opportunity Funds

Investments seeking tax benefits in Opportunity Zones must be made through a qualified Opportunity Fund. A qualified Opportunity Fund is a privately managed investment vehicle organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (the vehicle must hold at least 90 percent of its assets in such property). A Limited Liability Company can organize a qualified Opportunity Fund if it is treated as a corporation or partnership for federal tax purposes.

Tax Incentives

The Opportunity Zones program offers three tax incentives for investing in low-income communities through a qualified Opportunity Fund:

  1. Temporary Deferral - A temporary deferral of taxable income for capital gains can be achieved for gains that have been reinvested into a qualified Opportunity Fund. The deferred gain must be recognized on the date when the opportunity zone investment is disposed of, or December 31, 2026, whichever is earlier.
  2. Step-Up in Basis - Investors can achieve step-up in basis for capital gains reinvested in a qualified Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years. The basis is increased by an additional 5% if held for at least 7 years.
  3. Permanent Exclusion - A permanent exclusion from capital gains tax liability from the sale or exchange of an investment in a qualified Opportunity Fund can be achieved if the investment is held for at least 10 years. The permanent exclusion only applies to gains accrued after the initial investment in a qualified Opportunity Fund.

Please note that this information is intended to be a summary of the most recent information available from the US Treasury, the Internal Revenue Service and other sources, and is not to be interpreted as tax advice. This program is made available through the federal tax code and is not administered in any way by the City of Worcester. Please consult a Certified Public Accountant for tax questions.

Resources

Contact Information

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Worcester, MA 01608

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