How are futures taxed in the U.S.? Section 1256 explained
Learn how U.S. federal tax rules can apply to regulated futures contracts, including 60/40 capital-gain treatment, year-end mark-to-market, Form 6781, and key exceptions.
Direct answer
Many U.S. exchange-traded futures are Section 1256 regulated futures contracts. Capital gains and losses are generally split 60% long-term and 40% short-term, with open contracts marked to market at tax year-end.
Start with the contract classification
This guide covers U.S. federal tax rules for an individual investor. As of September 18, 2026, the latest IRS Publication 550 and Form 6781 available for completed filing guidance are the 2025 versions.
Section 1256 includes regulated futures contracts, but not every product with “futures” in its name is automatically treated the same. Product type, exchange status, hedging use, dealer status, and special elections can matter.
IRS Publication 550 defines a regulated futures contract by daily mark-to-market margin mechanics and trading on, or subject to the rules of, a qualified board or exchange.
For a specific symbol, confirm the broker’s tax classification and year-end statement before applying the general rule.
Understand the 60/40 capital-gain split
For capital gain or loss on a Section 1256 contract, the standard rule treats 60% as long-term and 40% as short-term, regardless of the actual holding period.
Suppose the net Section 1256 gain reported for the year is $12,500. The simple split is $12,500 × 60% = $7,500 long-term and $12,500 × 40% = $5,000 short-term.
The 60/40 rule is a character rule, not a 60% tax rate. Your actual tax depends on netting, other gains and losses, filing status, deductions, state rules, and other facts.
Open positions can create taxable gain or loss at year-end
Section 1256 contracts held at tax year-end are generally treated as sold at fair market value on the last business day of the year, even if the trade remains open.
Assume an open regulated futures position has a $4,000 tax gain at the year-end mark. The general split is $2,400 long-term and $1,600 short-term for that tax year.
If the position later closes with a $1,500 loss measured from the year-end tax mark, that later change is generally recognized in the next tax year rather than taxing the earlier $4,000 again.
This tax mark is different from the daily economic P&L process described in futures realized vs. unrealized P&L.
Form 6781 is the main federal reporting form
IRS Form 6781 Part I is used to report gains and losses from Section 1256 contracts that were closed during the year or remained open at year-end under the mark-to-market rule.
The form calculates the 40% short-term and 60% long-term portions before those amounts flow into the broader capital-gain reporting process.
Brokers may report aggregate profit or loss for regulated futures contracts on Form 1099-B. Reconcile that statement with your own trade ledger rather than reconstructing tax results from deposits and withdrawals.
Do not assume every futures position gets standard treatment
A properly identified business hedge can be outside the normal Section 1256 mark-to-market treatment. Mixed straddles, dealer positions, and certain foreign or securities-futures products can also require different rules.
If a futures position offsets another investment or business exposure, do not assume the 60/40 result before checking the straddle and hedging rules.
The related guide on Section 1256 options shows why product classification matters even when two derivatives look economically similar. [!WARNING] Tax classification is product- and taxpayer-specific Do not label a trade Section 1256 only because it trades on an exchange or uses margin. Confirm the contract category, account statement, hedge status, and current IRS instructions.
Build a practical year-end reconciliation
Before filing, save the broker’s Form 1099-B, monthly statements, year-end open-position report, realized gain and loss summary, contract symbols, and any records showing a hedge or straddle election.
Then reconcile three numbers: realized Section 1256 gain or loss, year-end mark-to-market gain or loss on open contracts, and the aggregate amount reported by the broker.
Do not use margin deposits as cost basis. Futures margin is collateral, not the purchase price of the contract, as explained in futures margin vs. leverage. [!TRYMARK] TryMark tax checkpoint At year-end, list each open futures symbol and its broker tax classification. Compare the broker’s Section 1256 total with your realized P&L plus the year-end tax mark before filing.
Keep the 2026 timing boundary visible
The IRS pages checked on September 18, 2026 still list Publication 550 and Form 6781 for tax year 2025 as the current completed revisions. Tax-year 2026 instructions may change before 2026 returns are filed.
Use this guide for mechanics, then verify the final 2026 Form 6781, Publication 550, and broker statement when they become available for your return.
State and local tax rules can differ from federal treatment. Taxpayer status, elections, business hedging, entities, retirement accounts, and straddles can also change the result.
Common questions
Are futures always taxed 60% long-term and 40% short-term?
No. The 60/40 rule generally applies to capital gain or loss from Section 1256 contracts. A product that is not a qualifying regulated futures contract, or a position subject to a hedge, straddle, dealer, or other exception, can differ.
Do I owe tax on a futures position I have not closed by December 31?
For a Section 1256 contract, generally yes on the year-end change. The position is treated as sold at fair market value on the last business day of the tax year for tax purposes, even though the trading position can remain open.
Which form reports Section 1256 futures gains and losses?
Form 6781 is the main federal form. Part I reports Section 1256 gains and losses, including year-end mark-to-market amounts, and separates the net result into 40% short-term and 60% long-term portions.
Is futures margin my tax basis?
Do not assume that. Futures margin is collateral supporting the contract, not a simple purchase price. Use the broker’s tax reporting, contract records, and current IRS instructions to reconcile the taxable Section 1256 result.