This bill proposes to amend the Internal Revenue Code of 1986 by establishing a new tax on certain financial trading transactions. Its primary purpose is to impose a levy on a broad range of market activities involving securities and derivatives.

The legislation introduces a graduated tax rate on "covered transactions," beginning at 0.02 percent for transactions after December 31, 2025. This rate will incrementally increase each year, reaching 0.1 percent for transactions occurring after December 31, 2029. The tax is applied to the fair market value of securities or the payment amount for derivatives.

A "covered transaction" generally includes any purchase of a security or any transaction involving a derivative if it occurs on a U.S. qualified board or exchange, or if a purchaser, seller, or party to a derivative is a U.S. person. Key exceptions include the initial issuance of certain securities and specific short-term indebtedness with a maturity of 100 days or less. The tax is typically paid by the qualified board or exchange, a broker, or directly by the purchaser, seller, payor, or payee depending on the transaction type and U.S. person status.

The bill broadly defines a "derivative" to encompass various contracts like options, futures, and swaps, whose value is determined by reference to underlying assets such as stock, debt, commodities, or indices. However, it provides specific exclusions for items like contracts requiring physical delivery of real property, certain securities lending transactions, and insurance contracts. The amendments are slated to apply to transactions occurring after December 31, 2025, with the Secretary of the Treasury providing guidance in consultation with the SEC and CFTC.