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Notice 2025-50 provides guidance regarding the substantial improvement of property in qualified opportunity zones (QOZs) that are comprised entirely of a rural area under P.L. 119-21, commonly known as the One, Big, Beautiful Bill Act (OBBBA). Under the OBBBA, effective July 4, 2025, if tangible property is located in a QOZ that is entirely within a rural area, the required additions to basis with respect to the property need only exceed 50% of the property's adjusted basis at the start of the relevant period to substantially improve it, rather than 100%. This guidance applies to the first element in the Purchased tangible property test in the Instructions for Form 8996.
Notice 2025-50 also provides a definition of a "rural area" and lists the QOZs designated prior to the OBBBA that are comprised entirely of a rural area.
These changes will be reflected in the updated Instructions for Form 8996 the next time they are revised. For more information, see Notice 2025-50 PDF.