- Gold (GC) and crude oil (CL) futures are typically Section 1256 contracts — listed on COMEX and NYMEX respectively, both US-regulated exchanges, so they generally receive the automatic 60/40 split.
- Gold futures and a gold ETF are not taxed alike. A physically-backed ETF such as GLD is structured as a grantor trust and its long-term gains are commonly taxed at the 28% collectibles rate — not the ~15–20% most investors assume, and generally worse than the ~26.8% §1256 blend on futures.
- The micro versions (MGC, MCL) generally receive the same treatment as the full-size contracts — a size difference, not a tax difference.
- These are physically deliverable contracts, unlike cash-settled index futures. In practice retail traders close or roll before delivery, and a roll is generally a closing transaction with its own tax result rather than a continuation.
- Open positions are generally marked to market at year-end, reported on Form 6781, and §1256 losses can typically be carried back three years.
- A funded-account payout is different again — trading GC or CL at a prop firm typically produces ordinary income, not 60/40. Every situation varies; a trader-specialist CPA can confirm.
Metals and energy futures raise two tax questions that equity index futures do not. The first is comparative: a gold trader almost always has the choice of an ETF instead, and those two routes are not taxed the same way — the difference is large and runs the opposite direction to most people's intuition. The second is mechanical: these are physically deliverable contracts, which raises questions index traders never face.
This page covers both. The general §1256 mechanics live on futures trading taxes, recapped briefly below.
Do gold and crude oil futures qualify for Section 1256?
Generally yes. Section 1256 covers regulated futures contracts on a qualified board of trade, and these contracts are listed on US-regulated exchanges — COMEX for the metals, NYMEX for energy, both part of the CME Group complex. Being a commodity rather than an equity index makes no difference to the treatment.
| Contract | Underlying | Exchange | Standard or micro | Typical §1256? |
|---|---|---|---|---|
| GC | Gold | COMEX | Standard | Yes |
| MGC | Micro gold | COMEX | Micro | Yes |
| CL | Crude oil (WTI) | NYMEX | Standard | Yes |
| MCL | Micro crude oil | NYMEX | Micro | Yes |
| Physically-backed gold ETF | Gold bullion via a trust | Equity exchange | — | No — see below |
Gold futures vs a gold ETF — the tax gap most traders have backwards
This is the most consequential thing on this page. A trader wanting gold exposure typically chooses between the futures contract and a physically-backed ETF, and assumes the ETF is the simpler, cheaper-taxed option. For long-term gains it is commonly the opposite.
A physically-backed gold ETF is generally structured as a grantor trust. Because a grantor trust is disregarded for tax purposes, the holder is commonly treated as owning the underlying bullion — and gains on bullion are generally collectibles gains, taxed at a maximum long-term rate of 28% rather than the 15% or 20% that applies to ordinary long-term capital gains. Several such ETFs say so directly in their own prospectuses. Held a year or less, the gain is generally short-term at ordinary rates, and the 28% cap does not help.
| Route | Typical treatment | Indicative top federal rate |
|---|---|---|
| Gold futures (GC / MGC) | §1256, automatic 60/40, no holding period needed | ~26.8% blended |
| Physically-backed gold ETF, held > 1 year | Commonly collectibles gain | 28% |
| Physically-backed gold ETF, held ≤ 1 year | Short-term, ordinary rates | up to 37% |
The futures route reaches its blended rate without any holding period — a position held for an hour gets the same 60/40 as one held for months. The ETF route needs a year just to reach 28%, which is still worse. For an active trader the comparison is not close; for a long-term holder it is narrower but still generally favours the contract. This is a genuine planning point rather than a technicality, and it is exactly the kind of instrument choice worth putting in front of a CPA before committing size.
What does physical delivery mean for my taxes?
Unlike the cash-settled index contracts, GC and CL are physically deliverable — the contract contemplates actual metal or actual barrels changing hands at expiry. In practice a retail trader essentially never takes delivery; brokers typically close or liquidate positions before the delivery window, and traders who want continuous exposure roll into the next contract month.
The tax point is that a roll is generally not a continuation. Closing the front month and opening the next is typically a closing transaction with its own gain or loss, plus an opening of a new position — not a single uninterrupted holding. For a §1256 contract this matters less than it would on the equity side, because the 60/40 split applies regardless of holding period and year-end marking happens anyway. But it does mean the trade count and the realised results are what your records should reflect, rather than treating a rolled position as one long trade.
Two smaller consequences worth knowing: exchange and clearing fees on a roll generally reduce the gain or increase the loss rather than sitting as separate deductions, and a trader who is ever actually assigned delivery has a materially different transaction on their hands — unusual enough that it is a conversation with a CPA rather than a page.
Silver and natural gas — and why the answer does not change
Gold and crude get asked about most, but the two next most-traded commodity contracts follow the identical rule.
| Contract | Market | Exchange | §1256 treatment |
|---|---|---|---|
| SI | Silver (5,000 oz) | COMEX | Yes — 60/40 |
| SIL | Silver (micro, 1,000 oz) | COMEX | Yes — 60/40 |
| NG | Henry Hub natural gas | NYMEX | Yes — 60/40 |
| QG | Natural gas (E-mini) | NYMEX | Yes — 60/40 |
COMEX and NYMEX are both CME Group designated contract markets, which is the only thing §1256(g)(7) is asking about. The commodity underneath is irrelevant to the test — a silver contract and a gold contract are the same tax instrument with different quotes.
The comparison set out above for gold applies to silver in the same way. A physically-backed silver ETF is generally a grantor trust, and a long-term gain on one is commonly taxed at the 28% collectibles rate rather than the usual long-term rate. The silver futures contract is not a collectible for this purpose — it is a §1256 contract, blended 60/40, with no holding period required to get there.
So the same silver exposure can land at a materially different rate depending only on the wrapper you chose. Natural gas has no collectibles analogue, so that particular trap does not arise there.
One practical caution specific to natural gas: it is among the most volatile contracts traders deal with, and a §1256 position is marked to market at year end whether or not you closed it. That means an open December position can produce taxable gain on a trade you have not exited — the mark is automatic, not elective. That is true of every contract on this page; it simply bites hardest where the price moves most.
The mechanics, in brief — and where the detail lives
The full explanation of §1256, the 60/40 split, year-end mark-to-market, Form 6781 and the three-year loss carryback belongs on one page rather than being repeated per contract, and it is on futures trading taxes. The short version, so this page stands on its own:
- 60/40 is automatic. Gains and losses on a qualifying contract are treated as 60% long-term / 40% short-term regardless of holding period, with no election to file. For most traders that puts the top blended federal rate near 26.8% rather than up to 37%.
- Open positions are marked to market at year-end. A position still open on December 31 is generally treated as sold at the closing price that day, and the resulting gain or loss counts for that year even though nothing was closed.
- Reporting runs through Form 6781, not Schedule D directly, and the broker's 1099-B generally reports a §1256 aggregate figure rather than trade-by-trade detail.
- Wash sales generally do not apply to §1256 contracts — a loss taken and the position immediately reopened is typically still deductible, unlike the equity side.
- Losses can typically be carried back three years against prior §1256 gains by election, which is unusual and worth knowing after a bad year.
- Commissions and exchange fees generally reduce the gain or increase the loss rather than being separate deductions; platform, data and subscription costs are a different category — see trader tax deductions.
Two adjacent decisions interact with all of this: whether you qualify for trader tax status, and whether a §475 mark-to-market election makes sense — noting that electing MTM on commodities can convert §1256 gains into ordinary income, which usually works against a futures trader. Because nothing is withheld from trading gains, quarterly estimated payments are generally how traders avoid an underpayment penalty.
Does a GC or CL payout from a prop firm get the same 60/40 treatment?
Typically no, and this is the most expensive misunderstanding on this page. Section 1256's 60/40 split attaches to a qualifying contract held in your own account. When you trade a GC or CL inside a funded account belonging to Apex, TopStep or Tradeify or any other prop firm, the contract is not yours — the firm's is. What you receive is a share of profits paid for your trading services.
For most US traders that payout is therefore ordinary income, commonly self-employment income on Schedule C, carrying income tax at your marginal rate plus 15.3% self-employment tax on 92.35% of net earnings — not the roughly 26.8% blended ceiling that applies to GC or CL positions held in your own account. The instrument being traded does not change that; the ownership of the account does.
A trader who reports prop payouts as 60/40 gains may be understating tax on a position that is difficult to support. A trader who reports their own GC or CL profits as ordinary income may be overpaying. A trader who does both in the same year has two different kinds of income and typically tracks them separately — same screen, same ticker, different tax character. Detail on prop firm taxes and, per firm, on the Apex, TopStep and Tradeify guides.
Frequently Asked Questions
Are gold futures taxed at 60/40?
Generally yes. GC is listed on COMEX, a US-regulated exchange, so gold futures typically fall under Section 1256 and receive the automatic 60% long-term / 40% short-term split regardless of holding period. Micro gold (MGC) generally receives the same treatment. Reporting runs through Form 6781, and open positions are typically marked to market at year-end.
Are gold futures taxed better than a gold ETF?
For long-term gains, commonly yes — which surprises most people. A physically-backed gold ETF is generally a grantor trust, so the holder is commonly treated as owning bullion, and gains on bullion are typically collectibles gains capped at 28% long-term rather than 15% or 20%. Gold futures under Section 1256 typically reach a blended ceiling near 26.8% with no holding period required at all. Held a year or less, the ETF gain is generally short-term at ordinary rates. Every situation varies and this is worth modelling with a CPA before committing size.
Are crude oil futures Section 1256 contracts?
Generally yes. CL is listed on NYMEX, a US-regulated exchange, so crude oil futures typically qualify for Section 1256 and the 60/40 split. Micro crude (MCL) generally receives the same treatment. Being an energy commodity rather than an equity index makes no difference to the treatment.
Does rolling a futures contract trigger tax?
Generally yes, in the sense that a roll is typically not a continuation. Closing the front month and opening the next is normally a closing transaction with its own gain or loss plus a new opening position, rather than one uninterrupted holding. For a Section 1256 contract this matters less than on the equity side, because 60/40 applies regardless of holding period and year-end marking happens anyway — but your records should reflect the actual transactions rather than treating a rolled position as a single long trade.
What if I take delivery of a futures contract?
Unusual for a retail trader — brokers typically close or liquidate positions before the delivery window, and traders wanting continuous exposure roll instead. A trader who is actually assigned delivery has a materially different transaction on their hands, and that is a conversation with a CPA rather than something a general page can resolve.
If I trade gold or crude at a prop firm, is it still 60/40?
Typically no. Section 1256 attaches to a qualifying contract held in your own account. In a funded account the contract belongs to the firm, so the payout is generally compensation for a service — ordinary income, commonly self-employment income on Schedule C with 15.3% self-employment tax. The instrument does not decide the treatment; who owns the account does.
Related resources
Compare the futures route against the alternative
The Section 1256 calculator estimates what 60/40 treatment is worth against ordinary short-term rates — useful when the other option is an ETF taxed as a collectible. Crypto futures complete the set, and carry the clearest venue lesson of the four.
Estimate the 60/40 difference →Or take the free Tax Snapshot for a plain-English read on your whole position, or create a free account to get matched with a CPA who specializes in futures. How we handle your data: security.
General information about US tax treatment of exchange-traded futures, not personalized tax advice; TraderTax is a platform that matches traders with licensed tax professionals rather than a CPA firm. Contract specifications are deliberately not reproduced here — confirm the current contract on the exchange's own specification page, since whether a specific contract qualifies under §1256 can turn on facts particular to the instrument. Every tax situation has unique facts; a CPA who specializes in trader taxation can confirm what applies to you.