Gold Futures Tax: Section 1256 and the 60/40 Rule

Gold futures are taxed under a special regime that does not apply to physical metal or to most funds that hold metal. The rule, Section 1256 of the Internal Revenue Code, applies to regulated futures contracts and certain other financial instruments. It changes both the character and the timing of gains and losses.

For a gold futures contract, every gain or loss—whether realized or unrealized at year-end—is split into two parts: 60% is treated as long-term capital gain or loss, and 40% as short-term. This is the “60/40 rule.” The split applies regardless of how long the position was actually held. A contract bought and sold within a week still gets the 60/40 treatment.

In addition, open positions at the end of the tax year are marked to market. That means the contract is treated as if it were sold at fair market value on the last business day of the year, and the resulting gain or loss is recognized for that year, even though the position remains open. The following year, the basis is adjusted to that year-end value, so the same economic gain is not taxed twice. This mark-to-market rule applies to futures, options on futures, and certain other contracts, but not to physical metal or to most exchange-traded funds that hold metal directly.

The tax rate on the 60% long-term portion is the capital gains rate, which for most taxpayers is capped at 20% (plus the 3.8% net investment income tax for higher-income taxpayers). The 40% short-term portion is taxed at ordinary income rates, which can be as high as 37% for the 2026 tax year. The combined effect is a blended rate that is generally lower than the 28% collectibles maximum that applies to gains on physical gold and on certain funds that hold physical metal. However, the exact rate depends on the taxpayer’s bracket and the year, and rates are set by statute and can change.

For the 2026 tax year, the top ordinary income rate is 37%, and the long-term capital gains maximum is 20%. The 3.8% net investment income tax applies above certain thresholds. These figures are set by Congress and have changed over time; they are not fixed.

A key contrast: physical gold and many gold ETFs are taxed as collectibles, with a maximum long-term rate of 28%. Futures, on the other hand, are not collectibles for tax purposes. The 60/40 rule applies instead. This can be advantageous for active traders, but it also means that losses are subject to the same split, and the mark-to-market rule can accelerate tax liability even if the position is not closed.

How the Wrapper Determines the Rule

The tax treatment depends on what the investment actually holds. A regulated futures contract is a derivative, not physical metal. The underlying asset is gold, but the contract itself is a financial instrument. Section 1256 applies to the contract, not to the metal. If an investor holds physical gold, the gain is a collectible. If the investor holds a futures contract, the gain is split under 1256. If the investor holds shares in a fund that holds physical gold, the fund’s distributions and the investor’s gain on sale are generally taxed as collectibles, because the fund itself is treated as holding collectibles. If the fund holds derivatives, the fund’s own tax treatment may differ, but the investor’s gain on the fund shares is typically capital gain, not necessarily subject to the 1256 rules.

For example, a gold ETF that stores physical bullion in a vault is a grantor trust; the investor is treated as owning the metal directly, and gains are collectibles. A fund that invests in futures contracts may be a regulated investment company (RIC) and may elect to pass through the 1256 treatment to its shareholders, but the details depend on the fund’s structure and elections. The investor should check the fund’s annual report or prospectus for tax information.

Comparison: Futures vs. Physical vs. Fund

The following table summarizes the tax treatment for different ways to hold gold, as of the 2026 tax year. Rates are statutory and subject to change.

Note: The 60/40 rule applies to the gain or loss on the futures contract itself. The 40% short-term portion is taxed at ordinary rates, which can be higher than 28% for high earners. The effective blended rate for a high earner in 2026 could be approximately 37% on 40% and 20% on 60%, yielding about 26.8%, but that is an illustration, not a rule.

What People Get Wrong

The most common misconception is that gold futures are taxed as collectibles, like physical gold. That is not the case. The 60/40 rule is a separate statutory regime that applies to regulated futures contracts, and it overrides the collectibles treatment. Another common error is assuming that the holding period determines the character of the gain. For futures, the holding period is irrelevant; the split is fixed by statute. A third error is ignoring the mark-to-market rule, which can create a taxable gain in a year when no contract was sold. This surprises investors who are used to the realization principle for stocks and physical metal.

These misunderstandings are natural because most investors are familiar with the tax rules for stocks and real estate, where holding period matters and gains are recognized only on sale. Futures are different, and the 60/40 rule is an exception that many people do not encounter until they trade.

State Tax Considerations

State income tax treatment of futures gains varies. Some states conform to federal rules, while others have their own rates and may not recognize the 60/40 split. A few states have no income tax at all. The reader should check the rules of the state where they reside, as they change by legislative session.

Reporting and Forms

Futures transactions are reported on Form 6781, “Gains and Losses from Section 1256 Contracts and Straddles.” The form calculates the 60/40 split and the mark-to-market adjustment. The net amount is then carried to Schedule D. Brokers typically provide a statement with the necessary figures. The taxpayer does not need to compute the split manually if the broker reports it correctly, but the taxpayer is responsible for the accuracy of the return.

The Role of a Tax Professional

Because the rules are complex and interact with other provisions, such as the wash-sale rules (which do not apply to futures in the same way as to stocks), a taxpayer should consult a CPA or enrolled agent for their own position. The tax treatment depends on the taxpayer’s bracket, state of residence, and other investments. This page explains the general rules; it does not provide personal tax advice.