Modernization of Derivatives Tax Act of 2026

This bill changes federal income tax rules for derivatives, which are contracts such as options, futures, and swaps whose value depends on stocks, bonds, commodities, currencies, or other items. Under the bill, gains and losses on most derivatives would be counted each year as if the contract were sold at its fair market value at year's end, and they would be taxed as ordinary income or loss. When a taxpayer holds both an investment and a derivative that offsets most of its price risk, the bill treats the two together as an 'investment hedging unit' with special timing rules. The bill also repeals several existing tax code sections on options, futures, and short sales, and rewrites the rules on straddles. It also changes how insurance company debt holdings, investment fund losses, and a corporation's dealings in its own stock are taxed.

Full text and official record on Congress.gov

Sponsors

• Ron Wyden Democrat sponsor
• 0 cosponsors