Let's see what happens first, but yes, the proposed Ways & Means bill has a capital gains increase and a decrease in the estate/gift tax exemption. The Qualified Opportunity Zone (QOZ) program itself remains unchanged.
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How will Biden’s proposed tax plan impact Opportunity Zone investors?
It seems there will be an increase in capital gains and a decrease in the estate tax and gift tax exemption.
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An increase in the tax rate on long-term capital gains would make Opportunity Zone investments more attractive -- a higher tax rate means that greater amounts of taxes will be deferred/excluded under the OZ regime. The exception is for investors who have pre-effective date gains. They could essentially be deferring capital gains that otherwise would be taxed at a 20% federal rate to a year when they are subject to a higher rate (25% under the current House plan). Even so, they may decide that the benefit from the 10-year gain exclusion is worth this cost.
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