Key Takeaways — Section 1256 & the 60/40 Rule

Section 1256 splits gains 60% long-term / 40% short-term automatically — regardless of how long the position was held, and with no election to file.
For most traders that puts the top blended federal rate near 26.8% instead of up to 37% on short-term gains.
It typically covers regulated futures (/ES, /NQ, /MES, /CL, /GC) and broad-based index options such as SPX — but generally not single-stock options, and generally not single stock futures. Family by family: ES, NQ, MES, MNQ, gold and crude, and Treasury futures (ZB, ZN, ZF) — where the 60/40 saving this calculator shows is a federal benefit only, and generally does not come with the state tax exemption on Treasury interest.
§1256 positions are reported on Form 6781 rather than Schedule D, are typically wash-sale exempt, and open positions are generally marked to market on December 31.
A prop firm payout is usually a different animal — §1256 applies to contracts in your own account, so funded-account payouts are generally ordinary income instead. See prop firm taxes.
This tool gives a ballpark only. Every situation varies — a CPA who specializes in trader taxation can confirm what applies to a particular trader.

Your Futures Trading Numbers

Total Net Futures Gain/Loss This Year

Net profit or loss across all Section 1256 contracts (/ES, /NQ, /CL, etc.)

Your Ordinary Income Rate

Long-Term Capital Gains Rate

State Tax Rate

What instruments do you trade?

How Section 1256 Works

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The 60/40 Rule

60% of futures gains are taxed at long-term rates. 40% at short-term rates. Regardless of holding period — even intraday.

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No Wash Sales

Section 1256 contracts are completely exempt from wash sale rules. Sell at a loss, rebuy immediately — fully deductible.

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Auto Mark-to-Market

Open futures positions are automatically marked to market on Dec 31. No election needed — it applies automatically.

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3-Year Loss Carryback

Section 1256 losses can be carried back 3 years to offset prior-year gains — a rare and valuable tax feature.

The 60/40 split, the year-end mark, and the 3-year carryback modelled above are the IRS's rules, not this calculator's assumptions — they are set out on the IRS's About Form 6781, Gains and Losses From Section 1256 Contracts and Straddles page, which is also where §1256 gains are typically reported. Whether a particular contract qualifies can turn on facts specific to the instrument.

⚠️ Disclaimer: Estimates only. Actual tax depends on your complete income picture. Consult a licensed tax professional.

Your Section 1256 Estimate

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Section 1256 vs Stock Trading