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Has each U.S. state also conformed to federal QOZ regulations for purposes of state taxes?

As of February 2025, not all U.S. states have conformed to federal Qualified Opportunity Zone (QOZ) regulations for state tax purposes. State conformity depends on whether a state’s tax code aligns with Internal Revenue Code provisions related to QOZs. Some states have fully adopted these provisions, while others have not, leading to differences in tax treatment at the state level.

States that don’t conform to federal QOZ regulations:

1. California: Does not conform to federal QOZ provisions. Investments in QOZs are subject to state taxation, meaning taxpayers cannot defer or exclude gains at the state level as they can federally.
2. Massachusetts: Has not adopted the federal QOZ provisions, resulting in no state tax benefits for investments in QOZs.
3. Mississippi: Limits tax deferral on gains to in-state QOZ designations. Investments in out-of-state QOZs do not qualify for state tax deferral.
4. New York: Does not conform to federal QOZ provisions, so taxpayers cannot defer or exclude gains from QOZ investments for state tax purposes.
5. North Carolina: Has decoupled from federal QOZ provisions, meaning state tax benefits are not available for QOZ investments.
6. Hawaii: Limits tax benefits to Opportunity Zones within the state. Investments in out-of-state QOZs do not receive state tax incentives.

In non-conforming states, taxpayers investing in QOZs cannot defer or exclude capital gains from state taxation, even though such benefits are available federally.

Investors need to consult with tax professionals or refer to specific state tax codes to understand the implications of QOZ investments on state taxes, as state-specific regulations can significantly impact the overall tax benefits of such investments.