Arkansas communities have until July 31 to nominate eligible census tracts for designation as new federal Opportunity Zones, a program designed to attract private investment into economically distressed areas through federal tax incentives.
The Arkansas Economic Development Commission (AEDC) is accepting nominations as part of the next round of the federal Opportunity Zone program, which is scheduled to begin in January 2027.
According to AEDC Executive Director Clint O’Neal, the program gives investors the opportunity to defer or reduce federal capital gains taxes by investing in qualifying projects located within designated Opportunity Zones.
“Opportunity Zones were first enacted during President Trump’s first administration,” O’Neal said. “Opportunity Zones 2.0 will kick off in January 2027.”
312 Arkansas Census Tracts Eligible
Arkansas currently has 312 eligible census tracts, but federal law allows Governor Sarah Huckabee Sanders to nominate only 78 Opportunity Zones, or 25 percent of the eligible areas, to the U.S. Department of the Treasury.
State officials encourage communities to first determine whether they have an eligible census tract before submitting a nomination.
“The action item for Arkansans right now is to fill out the nomination form and tell the story of the potential investment and why the census tract should be an Opportunity Zone,” O’Neal said.
More Than Local Governments Can Apply
Unlike many economic development programs, Opportunity Zone nominations are not limited to city or county governments.
Residents, business owners, developers, chambers of commerce, nonprofit organizations and elected officials may all submit nominations.
O’Neal said the commission will evaluate nominations based on the quality of the information submitted rather than the number of applications received for a particular area.
Investment Opportunities Go Beyond Manufacturing
Opportunity Zones can support a wide variety of development projects, including:
Manufacturing facilities
Hotels
Restaurants
Downtown redevelopment
Mixed-use developments
Residential housing
Commercial and industrial projects
“The sweet spot for Opportunity Zones would be a census tract that is primed for investment where there’s actual opportunity,” O’Neal said. “So that we can see investors come in.”
He noted the program reaches beyond traditional industrial recruitment.
“Here at the Arkansas Economic Development Commission, a lot of times we’re focused on manufacturing, office settings and technology companies,” O’Neal said. “But this is hotel development, restaurant investment, downtown redevelopment and some residential development.”
Previous Program Produced Arkansas Success Stories
The original Opportunity Zone program began in 2018 and helped support numerous projects across Arkansas, including residential development in North Little Rock and downtown redevelopment in Springdale.
Although statewide investment totals are difficult to calculate because the tax benefits are claimed through IRS filings, state officials say communities have reported positive economic impacts.
O’Neal emphasized the program is designed to encourage private investment—not create new taxes.
“It’s a federal program involving the deferral or reduction of capital gains tax,” he said. “It incentivizes investors. It’s not a traditional economic development program.”
What Happens Next?
After the July 31 deadline, AEDC will review nominations during August and September before presenting recommendations to Governor Sarah Huckabee Sanders.
The governor’s final list must be submitted to the U.S. Department of the Treasury by the end of September.
Approved Opportunity Zones are expected to be announced during the 4th quarter of 2026, with the new designations taking effect in January 2027.
Officials encourage applicants to provide detailed examples of potential investment opportunities.
“The more specific examples would be helpful,” O’Neal said. “This will be a data-driven process, really looking to select eligible census tracts that have the highest chance of receiving investment.”
For more information and to access the nomination form, visit the Arkansas Economic Development Commission website.
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