New Wall Street Tax Act Imposes Up to 0.1% Fee on Stock and Derivative Trades Starting 2026

The newly proposed Wall Street Tax Act of 2025 is straightforward: it introduces a brand-new federal tax on most financial trades, officially called the “Tax on Trading Transactions.” If you buy a stock, a bond, or a derivative, this new excise tax will apply. The rate starts small at 0.02 percent for trades made in 2026, but it’s designed to scale up quickly, hitting 0.1 percent by 2030 and staying there. This tax applies to covered transactions involving securities or derivatives, provided the trade happens on a U.S. exchange or involves a U.S. person as a buyer or seller (SEC. 2).

The Cost of Trading: Who Pays the Tab?

This isn't just a tax on the big guys; it’s a tax on the mechanics of the market, and those costs rarely stay put. While the tax is technically paid by the exchange or the broker—depending on where the trade occurs—it means that the cost of doing business for financial institutions goes up. When a broker’s costs rise, those costs often get passed down to the client, meaning everyday investors and retirement funds could see an increase in transaction fees or slightly lower returns over time. If you’re a frequent trader, or if your 401(k) is heavily invested in funds that trade often, you will likely feel the friction of this new fee as it phases in over the next five years.

The bill defines “security” broadly to cover stocks, bonds, and partnership interests, but it wisely carves out an exception for the very first time a security is issued (the Initial Public Offering, or IPO) and for very short-term debt instruments that mature in 100 days or less. This suggests an intent to avoid penalizing companies raising capital for the first time or disrupting the short-term money markets that banks rely on for daily liquidity. However, the vast majority of daily trading activity, including derivatives—which the bill defines extensively (SEC. 4476)—will be subject to the new levy.

Global Trading and the CFC Catch

One of the most complex parts of the bill deals with international transactions, specifically involving Controlled Foreign Corporations (CFCs). A CFC is essentially a foreign company where U.S. shareholders hold more than 50% of the voting power or value. Under this Act, if a CFC engages in a covered transaction that incurs the tax, the liability for that tax doesn't stay with the foreign company. Instead, it gets punted directly to the U.S. shareholders, who must pay the tax proportionally based on their ownership stake (SEC. 4475(e)).

For a regular person who might own shares in a mutual fund that, in turn, holds a small piece of a CFC, this could create an unexpected and complicated new tax obligation. Imagine you’re a passive investor who suddenly needs to track trading activity in a foreign entity just to calculate a minuscule tax bill passed through to you. This provision dramatically increases the compliance burden for U.S. investors involved in global funds, making international investing significantly more complex.

The Implementation Headache

Implementing a tax on every trade in the world’s largest financial market is a massive undertaking. The bill tasks the Secretary of the Treasury, working with the SEC and the CFTC, to issue guidance on reporting and, crucially, to create rules to stop people from avoiding the tax (SEC. 4475(f)). While anti-avoidance rules are necessary, this gives the Treasury and regulatory bodies broad power to interpret the law and potentially close loopholes that haven't even been discovered yet. Given the complexity of modern financial products, especially derivatives, the definitions and rules they develop will be critical—and likely a source of significant friction and compliance costs for years to come.