The 0.7% versus 1.9% gap that the wrappers topic rests on comes from a single line of the tax code: a fund recognizes no gain on stock it hands out in kind. On 21 July 2026 a Treasury official named three uses of that line as planning that looks “too good to be true.” Nothing has followed yet. Here is everything that is actually moving as of 13 September 2026.
| Item | Status | What it would change |
|---|---|---|
| Treasury remarks naming box-spread ETFs, Section 351 seeding and dividend-avoidance funds as planning “under consideration” | Remarks, July 2026; no notice yet | A narrowing of the ETF in-kind rule “generally” would touch every index ETF, not just the named products |
| ETF share classes for mutual funds | Live, rolling out since November 2025 | Extends the ETF tax edge to existing mutual funds; tax-managed mutual funds lose their reason to exist |
| Repeal of ETF in-kind nonrecognition (2021 discussion draft) | Dormant, never introduced | Would end the ETF’s structural edge over mutual funds |
| Derivatives tax rewrite, S. 4331 | Live bill, 1% chance of clearing committee | Ordinary treatment for all derivatives; removes the 60/40 rule |
| A statutory wash-sale rule for spouses and IRAs, and a definition of “substantially identical” | Proposals in past budgets; not on the IRS guidance plan | Would codify what today rests on a 2008 ruling and a publication |
| California billionaire tax (one-time 5% on net worth over $1B) | On the November 2026 ballot | Nothing for anyone below $1B; a precedent for taxing unrealized gains |
| California’s top brackets (10.3 to 12.3%) sunset | Scheduled after tax year 2030 | Top state rate falls to 9.3% plus 1% over $1M unless extended |
| California conformity on HSAs | Bill analyzed, not enacted | Would end California’s annual tax on HSA contributions and earnings |
“Live” means an introduced bill, a granted order, or a qualified ballot measure; “proposal” means a discussion draft or a speech with no vehicle. Nothing here is a prediction.
The one to watch
The likeliest formal outcome of the Treasury remarks, if one comes, is a disclosure requirement on the named products first. A change to the underlying in-kind rule would reach every ETF, which is why it heads this list even for investors who own none of the named funds. The products themselves are described in the new ETFs built on one tax right.