The tax question every US perp trader needs to answer first
Before your first perpetual futures trade, understand how your gains and losses will be taxed. The answer depends on which exchange you use and what type of contract you're trading — and the difference can be significant.
Two key frameworks apply to perpetual futures in the US:
- ·Section 1256 contracts (regulated futures) — favorable 60/40 tax treatment
- ·Property / capital gains treatment (unregulated or spot-settled) — standard short/long term rates
Contracts traded on CFTC-regulated exchanges may qualify for Section 1256 treatment. Contracts on unregulated offshore platforms generally do not. Which venues and products qualify is a question for a licensed tax professional — do not assume qualification from marketing copy.
Section 1256 contracts — the favorable treatment
Traditional regulated futures contracts qualify as Section 1256 contracts under US tax law. The key benefits:
- ·60/40 rule: 60% of gains treated as long-term capital gains, 40% as short-term — regardless of how long you held the position. At the highest federal rates, this blends to approximately 26.8% vs the 37% short-term rate.
- ·Mark-to-market:Section 1256 contracts are marked to market at year end. You recognize gains and losses on December 31 even if you haven't closed the position. This means no wash sale rules apply — you can close a losing position and reopen it immediately without the wash sale disallowance that affects stock traders.
- ·Form 6781: Section 1256 gains and losses are reported on Form 6781, not Schedule D directly.
Whether CFTC-regulated perpetual futures qualify as Section 1256 contracts is an open legal question as of June 2026. The IRS has not issued formal guidance. Some tax practitioners believe they qualify based on the regulatory structure. Others are cautious. Get professional advice before assuming Section 1256 treatment.
If Section 1256 doesn't apply — standard capital gains treatment
If your perpetual futures trades don't qualify for Section 1256, they're taxed as property — the same framework that applies to spot crypto.
- ·Short-term capital gains (held less than 1 year): taxed at ordinary income rates (up to 37% federal)
- ·Long-term capital gains (held more than 1 year): taxed at preferential rates (0%, 15%, or 20%)
For perpetual futures specifically: most positions are held for days or weeks, not years. Expect short-term treatment under this framework.
Funding payments: when you receive funding payments (shorts receiving from longs during positive funding), those may be treated as ordinary income. When you pay funding, it may be deductible as a trading expense. Treatment is unsettled — track every funding payment.
How funding payments work → How Perpetual Futures Funding Rates Work
What to track — minimum record-keeping requirements
Whether Section 1256 or capital gains applies, you need:
For every trade:
- ·Open date and price
- ·Close date and price
- ·Gain or loss in USD
- ·Position size and leverage used
For every funding payment:
- ·Date
- ·Amount paid or received in USD
- ·Asset and direction (long or short)
Most regulated exchanges provide downloadable trade history. Export it at least monthly — don't rely on the exchange keeping records indefinitely.
Cost basis for crypto-settled positions: if your perpetual futures are settled in crypto (not USD), the settlement creates a taxable event at the USD value of the crypto received.
The wash sale rule — and why it matters less for futures
Stock traders know the wash sale rule: sell a stock at a loss and buy it back within 30 days, and you can't deduct the loss. For Section 1256 contracts, wash sale rules don't apply.
For non-Section 1256 perpetual futures treated as property — the IRS hasn't definitively ruled whether wash sale applies, but most practitioners treat crypto property as subject to wash sale. Conservative approach: wait 30 days before reopening a position you closed at a loss.
Working with a CPA
Perpetual futures taxation is genuinely complex and unsettled. Find a CPA who:
- ·Has experience with crypto and derivatives trading
- ·Understands the Section 1256 question
- ·Can advise on your specific exchange and contract type
Don't use a general-purpose tax preparer for this. The cost of a specialist is far less than the cost of getting it wrong.
New to perps? Start here → What Are Perpetual Futures?
Choosing a regulated exchange with clear tax reporting → How to Choose a Perpetual Futures Exchange