Opportunity Zones and New Market Tax Credits on Tribal Lands

Unlocking Investment and Growth in Native Communities

Native American reservations are among the most underinvested and underserved areas in the United States. Despite systemic barriers, tribal lands hold vast potential for infrastructure development, commercial enterprise, and social innovation. Two powerful financial tools — Opportunity Zones (OZs) and New Market Tax Credits (NMTCs) — are helping change this narrative by directing billions of dollars in capital to disadvantaged regions. When applied to Indian Country, these tools offer transformative potential for both tribes and investors.

Understanding Opportunity Zones

Opportunity Zones were established under the Tax Cuts and Jobs Act of 2017 to spur economic development in distressed communities by offering tax incentives to investors. There are over 8,700 designated OZs across the U.S., including hundreds located within tribal lands.

Investors who place capital gains into Qualified Opportunity Funds (QOFs) that invest in OZs are eligible for:

• Deferral of Capital Gains: Taxes on capital gains reinvested into a QOF can be deferred until 2026 or when the investment is sold, whichever comes first.
• Reduction of Capital Gains: If held for five to seven years, a portion of the deferred gains may be excluded.
• Tax-Free Appreciation: Gains from the QOF investment itself are tax-free if held for at least 10 years.

Learn more about OZ mechanics at the HUD Opportunity Zones Toolkit.

Opportunity Zones in Indian Country

Tribal lands often qualify as Opportunity Zones because they meet criteria for persistent poverty and low economic activity. The designation presents a unique chance to attract long-term, patient capital for projects such as:

• Affordable housing and mixed-use real estate
• Broadband infrastructure and clean water systems
• Renewable energy generation and storage
• Tourism, hospitality, and cultural centers
• Industrial parks and small business hubs

New Market Tax Credits (NMTCs)

The New Market Tax Credit Program (administered by the U.S. Treasury’s CDFI Fund) is designed to attract private investment to underserved communities. Through the program, investors receive a 39% federal tax credit over seven years when they invest in certified community development entities (CDEs) that serve low-income areas.

Key NMTC features:

• Credit is claimed over 7 years: 5% in years 1-3, 6% in years 4-7
• Applies to equity investments in CDEs
• Used for projects in real estate, community services, manufacturing, and mixed-use development

Using NMTCs on Tribal Lands

Tribal areas are prime candidates for NMTC investment due to their income and population statistics. Many CDEs have already established partnerships with tribal governments to bring capital to projects such as:

• Community health clinics and recovery centers
• Workforce training and trade schools
• Commercial kitchen incubators and food hubs
• Utility-scale solar and battery storage
• Culturally centered retail and artisan markets

Combining Opportunity Zones and NMTCs

One of the most powerful strategies for tribal economic development is combining OZ and NMTC benefits on a single project. While rare, this structure can unlock both:

• Immediate equity and long-term capital appreciation via OZs
• Federal tax credit returns via NMTCs

For example, a mixed-use community wellness campus on tribal land could qualify for both — with an OZ investor receiving capital gains deferral, and the tribe or developer earning NMTC proceeds to offset construction and programmatic costs.

See successful layered capital examples at the NMTC Coalition.

Legal Considerations on Tribal Land

• Land Status: Whether the land is trust, fee, or restricted determines how leases and tax status are applied.
• Sovereign Immunity: Most tribes require limited waivers for financing and federal compliance purposes.
• Permitting: Tribes issue their own permits — many with expedited timelines that are investor-friendly.
• Cultural Impacts: Investors must engage early and align with tribal values to avoid disruption to sacred or community lands.

Case Studies of OZ/NMTC Tribal Success

• Chickasaw Nation Opportunity Fund: A QOF that has supported small business development and tribal venture startups.
• Swinomish Tribe: Utilized NMTCs to build the first tribal dental therapy training center in the U.S.
• Pine Ridge Reservation: Several layered investments in broadband and solar infrastructure have used OZ/NMTC tools in tandem.

How to Access These Programs

For tribes:

• Work with legal and financial experts to form your own CDE
• Partner with trusted CDEs or fund managers to submit project proposals
• Engage with investors early to explain tribal governance, goals, and timelines

For investors:

• Identify projects on tribal lands that align with QOF or NMTC eligibility
• Partner with experienced tribal economic developers
• Utilize third-party compliance advisors to handle reporting

Conclusion: Capital with Impact and Integrity

Opportunity Zones and New Market Tax Credits offer more than tax advantages — they represent a pathway to equitable growth and generational change. On tribal lands, these programs can be used to correct decades of disinvestment while empowering Native nations to lead their own economic future.

With the right partnerships and intentional design, these tools can turn underutilized lands into engines of prosperity — grounded in sovereignty, culture, and sustainable development.

Tags: Investment Opportunities, Economic Development, Tribal Enterprises, Tax Incentives

Category: Economic Development