With commodities, 60% of the gains are treated as long-term capital gains and 40% are treated as short-term capital gains. It does not matter the amount of time you held the contracts, this is how they are taxed. With stocks, anything held less than 12 months is considered short-term capital gains and you are taxed at whatever tax bracket you are in. Long-term capital gains are capped at 15%, which is much more favorable to those with higher incomes.
Commodities Tax Rates:
60 percent of gains will be taxed at 15 percent, which is the long-term capital gains rate.
40 percent of gains will be taxed at the short-term capital gains rate - 35 percent (or your ordinary rate which could be higher or lower).
The mix of the long-term and short-term rates equals 23 percent for commodities.
Stocks Tax Rates:
All short-term capital gains will be taxed at your ordinary tax rate – 35 percent, for example.
In this example, if you had $50,000 in short-term capital gains, you would save $6,000 in taxes trading commodities instead of stocks.
Commodities taxes = $11,500
Stocks taxes = $17,500
