The tax rate on Section 1256 contracts is
- 60% is taxed as long-term capital gains
- 40% is taxed as short-term capital gains
For non-Section 1256 contracts the tax rate is determined by the length of the holding period.
IRS Publication 550 goes into detail of what is considered a Section 1256 contract. Please note that the Market to Market rules are different and Section 1256 contracts will be reported on a Form 6781
