Does the Wash Sale Rule Apply to Futures Contracts?

The wash sale rule does not apply to regulated futures contracts. Section 1256 of the tax code carves these contracts out of the wash sale restrictions in Section 1091, so you can close a losing futures position and open an identical one the same day without losing the deduction. The exemption is narrower than it sounds, though. It covers regulated futures and the other four categories of Section 1256 contracts, not every futures-style instrument, and separate anti-abuse rules can still defer a loss even when a wash sale cannot.

Why Regulated Futures Sit Outside the Wash Sale Rule

Section 1091 applies only to losses on “shares of stock or securities.”¹ Regulated futures contracts are not securities. They fall into a separate statutory category, Section 1256 contracts, which has its own tax framework.²

Congress didn’t stop at classification. Section 1256(f)(5) states directly that the wash sale rule “shall not apply to any loss taken into account by reason of” the mark-to-market provisions.² That language forecloses any argument that a particular futures contract behaves enough like a security to be pulled back into Section 1091.

The reason for the carve-out is structural. Section 1256 contracts are marked to market at year end. Every open position is treated as if you sold it at fair market value on the last business day of the year, and the resulting gain or loss is recognized on that year’s return whether you actually closed the trade or not.² Because every gain and loss is captured automatically each December, there’s no window for the strategic loss-timing the wash sale rule was written to prevent. An adjustment the following year keeps you from double-counting anything already recognized.

Which Contracts Actually Qualify

The wash sale exemption travels with Section 1256 status, so the practical question is whether your instrument is on the list. Section 1256 recognizes five categories:²

Regulated futures contracts traded on a qualified exchange with a daily mark-to-market system for margin. This covers most commodity futures and broad-based index futures such as the E-mini S&P 500.
Foreign currency contracts, meaning certain interbank forward contracts requiring delivery of, or settled in, a foreign currency.
Nonequity options, which include options on broad-based stock indexes, commodities, and currencies, but not options on individual stocks or narrow-based indexes.
Dealer equity options, meaning listed equity options bought or sold by registered options market makers in the normal course of dealing.
Dealer securities futures contracts held by dealers acting in their dealing capacity.

Contracts outside these five categories don’t get Section 1256 treatment and can be subject to standard capital gains rules, including the wash sale restriction. The instrument that most often surprises traders is the single stock future.

Single Stock Futures Are the Main Exception

Single stock futures obligate you to buy or sell shares of a specific company at a future date, and the tax code treats them as securities rather than as Section 1256 contracts. Section 1234B defines a “securities futures contract” as a contract for the future delivery of a single security or a narrow-based security index.³

Because that classification makes them securities, they fall inside the wash sale rule. Section 1091(e) extends wash sale treatment to losses from “the sale, exchange, or termination of a securities futures contract.”¹ Close a single stock future at a loss and enter a new contract on the same underlying stock within 30 days before or after that sale, and the loss is disallowed. The disallowed amount is added to the cost basis of the replacement position, deferring the tax benefit until you finally exit without repurchasing.

Mixing Stocks and Futures

The rule also reaches across instrument types. Selling shares of a company at a loss and buying a single stock future on that same company within 30 days triggers a wash sale, because Section 1091 treats contracts or options to acquire stock as potentially “substantially identical” to the stock itself.¹

Broad-based index futures are a different matter. A futures contract on the S&P 500 and an ETF tracking the same index have different legal structures, margin mechanics, expirations, and tax treatment. Most practitioners take the position that the two are not substantially identical, though the IRS has never published guidance drawing that line definitively. A broad-based index future doesn’t represent a contract to acquire any particular stock, so the statutory hook that catches single stock futures doesn’t reach it.

The safer the distance between the two positions, the stronger the argument. Selling Apple shares and buying E-mini S&P 500 futures is a fundamentally different economic exposure. Selling Apple shares and buying a single-stock Apple future is not.

Straddle Rules Can Still Defer Your Loss

The wash sale exemption doesn’t clear every path to a futures loss deduction. Section 1092 imposes a separate set of constraints through the straddle rules, and these do apply to Section 1256 contracts.⁴

A straddle exists whenever you hold offsetting positions, meaning one position substantially reduces your risk of loss on another. The classic case is going long a crude oil future in one delivery month while short a nearby month. If you close the losing leg while the winning leg is still open, you can only deduct the loss to the extent it exceeds the unrealized gain on the offsetting position.⁴ The disallowed portion is deferred, not permanently lost. It becomes deductible when the offsetting position also closes.

For active futures traders, this catches more losses than the wash sale rule ever could. Anyone running spread strategies, calendar rolls, or hedged books across correlated contracts needs to track whether their positions qualify as straddles. The test is whether there’s a substantial diminution of risk from holding both sides, not whether the contracts are identical.

Identified Straddles and Mixed Straddles

You can manage the tax mechanics of a straddle by identifying it in your records before the end of the day you acquire it. An identified straddle receives an alternative treatment: instead of deferring the loss, the disallowed amount is added to the basis of the offsetting positions.⁴ The economics are similar, but the tracking is cleaner.

When a straddle contains at least one Section 1256 contract and at least one non-Section 1256 position, such as a stock or equity option, it’s a mixed straddle.⁴ Mark-to-market treatment still applies to the Section 1256 leg unless you elect otherwise. Not recognizing that you’ve built a mixed straddle can produce an unpleasant year-end result, because the Section 1256 leg is marked to market at fair value on December 31 while the offsetting position sits with an untaxed gain or loss.

One boundary worth noting: hedging transactions as defined in Section 1256(e) are excluded from straddle treatment entirely.⁴ A bona fide business hedge, such as a farmer hedging crop prices, doesn’t trigger the straddle limitations.

A Note on Crypto Futures

Cryptocurrency sits in an unusual place under the current wash sale rule. Section 1091 applies to “stock or securities,” and most digital assets are not classified as securities under current tax law, so selling crypto at a loss and repurchasing the same token the next day does not trigger a wash sale.¹ Tokenized securities are the exception, because they represent the underlying security itself.

Crypto futures add another layer. If a crypto futures contract qualifies as a regulated futures contract under Section 1256, traded on a qualified exchange with daily mark-to-market margining, it receives the same wash sale exemption as any other Section 1256 contract. Whether a particular product meets that definition depends on the exchange and the contract’s structure. Bipartisan proposals to extend the wash sale rule to digital assets have circulated in Congress across multiple sessions, but no such legislation had been enacted as of early 2026.

1
Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities
2
Office of the Law Revision Counsel. 26 USC 1256 – Section 1256 Contracts Marked to Market
3
Office of the Law Revision Counsel. 26 USC 1234B – Gains or Losses From Securities Futures Contracts
4
Office of the Law Revision Counsel. 26 USC 1092 – Straddles