Options Trading Tax Calculator
Contract type
§1256: 60/40 LTCG/ordinary split, no wash-sale rule. Equity options: regular cap gain rules.
Holding period (equity options only)
Filing status
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How to use
- 1 Enter your net options P/L for the year (positive = gain, negative = loss). Aggregate all option trades in the same regime.
- 2 Choose contract type: Equity (single stocks, SPY/QQQ/IWM ETFs), §1256 Index (SPX, NDX, RUT, VIX, futures), Broad ETF, or Forex.
- 3 For equity options: enter holding period (short ≤1 yr or long >1 yr). §1256 doesn't require this — automatic 60/40.
- 4 Enter filing status, other ordinary income (for bracket stacking), and state cap gains rate.
- 5 Click Calculate to see treatment, short/long portions, federal tax, NIIT 3.8%, state, total tax, and net after-tax. Equity treats short as ordinary; §1256 splits 60/40 automatically.
About Options Trading Tax Calculator
FAQ
Q How are options trading gains taxed in 2026?
Two regimes. EQUITY options (single stocks, narrow ETFs): regular cap gains rules — short-term ordinary, long-term 0/15/20%. §1256 contracts (broad-index SPX/NDX/RUT, futures): mark-to-market with 60/40 split (60% LTCG + 40% short-term) regardless of holding period.
Q What is the §1256 60/40 rule?
For Section 1256 contracts, gains and losses are AUTOMATICALLY split 60% long-term + 40% short-term regardless of how long you held the position. Combined with no wash-sale rule and 3-year loss carryback, this gives index/futures traders ~22% lower effective rates than active equity options traders in top brackets.
Q Are SPX options subject to wash sale?
NO — SPX options are §1256 broad-based index options, exempt from wash sale rule §1091. You can sell SPX at a loss and immediately buy back without disallowance. Same for NDX, RUT, VIX, futures, and options on futures. SPY options (narrow-ETF) ARE subject to wash sale.
Q What is mark-to-market for §1256?
Every §1256 contract held on December 31 is TREATED AS SOLD at year-end fair market value. Gain/loss is recognized whether you actually closed the position. The new basis becomes the year-end FMV. Result: §1256 traders cannot defer gains across calendar years.
Q How do I report option trades?
Equity options: Form 8949 (each trade) + Schedule D. §1256 contracts: Form 6781 (mark-to-market summary, no per-trade detail) — total flows to Form 8949 lines for 60/40 split. Most brokers issue 1099-B with §1256 box checked.
Q Can I carry back §1256 losses?
Yes — IRC §1212(c) lets you elect to carry back net §1256 losses 3 years against §1256 gains in those years. Other types of gain don't qualify. File Form 6781 with the carryback election. Powerful if you had big 2023-2025 §1256 gains and a 2026 loss.
Q Are SPY and QQQ options §1256?
NO — SPY (S&P 500 ETF), QQQ (Nasdaq-100 ETF), IWM (Russell 2000 ETF) options are EQUITY options under regular cap gains rules. The corresponding INDEX options on the same underlyings — SPX, NDX, RUT — ARE §1256. This is why active traders prefer SPX over SPY for tax efficiency.
Q Do options qualify for QSBS exclusion?
Generally no. QSBS §1202 applies to STOCK held by individuals — not options. Exercising an Incentive Stock Option (ISO) or Non-Qualified Option (NQO) starts the 5-year QSBS holding period from the EXERCISE date, not the grant date. Plan ISO exercises at least 5 years before exit for QSBS treatment.
Official resources
IRS — About Form 6781 (§1256 Contracts and Straddles)
Internal Revenue Service official Form 6781 page for reporting §1256 mark-to-market gains/losses with 60/40 split.
IRS Publication 550 — Investment Income and Expenses
Comprehensive IRS guide covering options taxation, wash sale rules, §1256 mark-to-market, and Section 1091.
IRS — 26 USC §1256 Mark-to-Market
Full text of IRC Section 1256 governing mark-to-market treatment of regulated futures and broad-based index options.
IRS — IRC §1091 Wash Sale Rule
Internal Revenue Code Section 1091 governing wash sale loss disallowance for substantially identical securities.