Capital Gains Tax on Precious Metals, Gold, and Collectibles

The capital gains tax on precious metals runs higher than most investors expect. The IRS classifies gold, silver, platinum, and palladium as collectibles, so long-term profits face a maximum federal rate of 28% rather than the 20% ceiling that applies to stocks. Sell within a year of buying and the gain is taxed at your ordinary income rate, which reaches 37% at the top bracket. High earners can owe an extra 3.8% net investment income tax on top of either figure.

The Rates You Actually Pay

Federal tax law groups precious metals with artwork, antiques, stamps, and coins under the collectibles category. The statute lists “any metal or gem,” which sweeps in bullion coins like American Eagles and Krugerrands, industrial bars, and jewelry with significant bullion value.¹ Shares in a gold ETF structured as a grantor trust (SPDR Gold Shares and similar funds) receive the same treatment, because each shareholder is treated as a direct owner of the underlying metal.²

Long-Term Gains

Hold the metal more than one year and the gain qualifies as long-term, capped at a 28% federal rate.² The 28% is a ceiling, not a flat rate. If your taxable income puts you in a bracket below 28%, you pay that lower bracket rate on the collectible gain instead.³

Short-Term Gains

Sell within a year and the profit is taxed at ordinary income rates, which run from 10% to 37% for 2026. Selling one day before the one-year mark can cost nine percentage points on the gain compared with waiting.

The 3.8% Net Investment Income Tax

A separate 3.8% surtax hits net investment income, including gains from precious metals, once your modified adjusted gross income exceeds $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately).⁴ It stacks on top of the capital gains rate, so a high earner selling gold held more than a year can face a combined 31.8%. Those thresholds are not indexed for inflation.⁵

Calculating the Gain

Your taxable gain is the sale price minus your adjusted cost basis. Most of the money saved or lost on a precious metals return is decided in the basis calculation, because every legitimate cost you include reduces the taxable profit dollar for dollar.

What Goes Into Your Basis

Start with what you paid for the metal, then add costs directly connected to acquiring and holding it. The IRS includes sales tax, freight, and other acquisition costs in the basis of any asset.⁶ For precious metals, that typically includes:

Dealer premiums and commissions above spot price at purchase
Sales tax paid at the time of purchase
Shipping and transit insurance to receive delivery⁷
Vault storage or safe deposit box fees during the holding period
Professional appraisal fees to verify authenticity or value

Subtract that adjusted basis from your net sale proceeds. A negative result is a capital loss.

Which Coins Did You Sell?

If you bought the same type of metal at different times and prices, you can use the specific identification method to designate which units you’re selling. Picking coins from a higher-cost purchase reduces the reportable gain. You’ll need records that tie each sale to a particular acquisition: serial numbers, dated receipts, or segregated storage records. Without adequate identification, the IRS defaults to first-in, first-out ordering, which typically assumes you sold your oldest and cheapest holdings first.

Basis for Inherited and Gifted Metals

How you received the metal changes your starting basis, sometimes dramatically.

Inherited

When you inherit precious metals, your basis resets to the fair market value on the date of the prior owner’s death. This stepped-up basis wipes out unrealized gains accumulated during the decedent’s lifetime.⁸ If a parent bought gold at $400 an ounce and it was worth $2,500 at death, your basis is $2,500. Selling at $2,600 leaves only $100 per ounce of taxable gain.

The executor may elect an alternate valuation date six months after death if doing so reduces the estate’s overall tax. Your basis would then match that alternate date. When an estate filed Form 706 and you received a Schedule A from Form 8971, the basis you report has to be consistent with the value used for estate tax.⁹

Gifted

A lifetime gift works differently. Your basis generally carries over from the donor. If they bought at $800 an ounce and gave you the metal when it was worth $2,500, your basis stays $800.¹⁰ One wrinkle: if the fair market value at the time of the gift was lower than the donor’s basis, and you later sell at a loss, your basis for calculating the loss is the lower fair market value. Gift tax the donor paid on the transfer can also add to your basis in proportion to the metal’s appreciation.

Using Losses to Reduce the Tax

Capital losses on other investments can offset your precious metals gain, and the netting order works in your favor. The IRS separates long-term gains into three buckets: the standard 0%/15%/20% category, the 25% category for unrecaptured real estate depreciation, and the 28% collectibles category. Gains and losses within each bucket net first. A net loss from the standard stock category then offsets 28% collectibles gains before touching anything else, so ordinary stock losses can wipe out gain that would otherwise be taxed at the highest rate. Long-term loss carryforwards from prior years apply the same way.

If total losses exceed total gains for the year, you can deduct up to $3,000 of the excess against ordinary income ($1,500 if married filing separately). Anything left carries forward indefinitely.¹¹

One caveat: losses on metals held for personal use, like jewelry you wore, are not deductible. Only investment-purpose metals generate deductible losses.

Reporting the Sale

You owe tax on the gain whether or not the dealer sends you a 1099-B. Reporting requirements for dealers are narrow. A dealer files Form 1099-B only when the sale involves a metal in a form and quantity that could satisfy a CFTC-approved regulated futures contract. In practical terms, selling a single gold coin usually does not trigger reporting, while selling 25 or more one-ounce gold coins of the same type within 24 hours does.¹² American Gold and Silver Eagles are exempt from dealer reporting regardless of quantity. The IRS aggregates sales within a 24-hour window to the same customer to prevent structuring.

Regardless of what the dealer reports, you list every sale on Form 8949, entering the description of the metal, acquisition date, sale date, proceeds, and cost basis. The totals flow to Schedule D of your Form 1040, which combines capital gains and losses across all asset types.¹³¹⁴ If you sold on an installment plan and payments arrive across multiple tax years, report the gain as payments come in on Form 6252 rather than recognizing everything in the year of sale.¹⁵

Keep purchase receipts, dealer invoices, storage contracts, shipping confirmations, and any 1099-B forms for at least three years after filing. The IRS can audit within three years under normal circumstances, longer if it suspects a substantial understatement.¹⁶

Ways to Cut the Bill

The 28% ceiling is not inevitable. Several legitimate moves reduce the tax on a precious metals sale.

Hold longer than one year. Short-term gains reach 37%; long-term gains cap at 28% and may be taxed less depending on your bracket.
Harvest losses. The wash sale rule applies only to “shares of stock or securities,” so physical gold, silver, and platinum are outside it. You can sell physical metal at a loss, claim the deduction, and buy replacement metal the same day. ETF shares are securities and stay subject to the wash sale rule.¹⁷
Use a self-directed IRA. Qualifying bullion held by an approved trustee defers tax until withdrawal in a traditional IRA, or eliminates it in a Roth. IRA distributions are taxed as ordinary income or tax-free depending on account type; the 28% collectibles rate never applies to them.¹
Donate appreciated metals to a qualified charity that uses the item in connection with its exempt purpose. You deduct the fair market value and avoid the capital gain entirely. Items valued above $5,000 need a certified appraisal, and the deduction for appreciated property donated to a public charity is generally capped at 30% of adjusted gross income, with a five-year carryforward for unused amounts.
Spread large positions across multiple tax years to keep each year’s gain in a lower bracket.

One option that used to exist is gone. Before 2018, investors could swap one type of bullion for another and defer the gain under the like-kind exchange rules. The Tax Cuts and Jobs Act limited Section 1031 to real property, so swapping gold for silver or one bullion type for another is now fully taxable.¹⁸

Penalties for Getting It Wrong

An absent 1099-B is not a shield. If the IRS determines you were negligent or substantially understated income, it can assess a 20% accuracy-related penalty on the underpayment.¹⁹ If it establishes fraud, the penalty rises to 75% of the fraud-related portion.²⁰ Willful evasion is a felony carrying up to five years in prison and fines up to $100,000 for individuals ($500,000 for corporations), plus prosecution costs.²¹

State Tax

Most states with an income tax treat precious metals gains as taxable income, with rates ranging from roughly 2% to over 13%. A handful of states impose no income tax at all, so where you live affects your net return meaningfully. State sales tax on the original purchase is a separate matter: a majority of states now exempt gold and silver bullion, sometimes with minimum purchase or purity conditions, while a few still tax it in full. When you did pay sales tax at purchase, that amount is part of your cost basis and reduces the taxable gain when you sell.

1
Office of the Law Revision Counsel. 26 U.S.C. 408 – Individual Retirement Accounts
2
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
3
Office of the Law Revision Counsel. 26 U.S.C. 1222 – Other Terms Relating to Capital Gains and Losses
4
Internal Revenue Service. Net Investment Income Tax
5
Internal Revenue Service. Topic No. 559, Net Investment Income Tax
6
Internal Revenue Service. Topic No. 703, Basis of Assets
7
Internal Revenue Service. Publication 551, Basis of Assets
8
Office of the Law Revision Counsel. 26 U.S.C. 1014 – Basis of Property Acquired From a Decedent
9
Internal Revenue Service. Gifts and Inheritances
10
Office of the Law Revision Counsel. 26 U.S. Code 1015 – Basis of Property Acquired by Gifts and Transfers in Trust
11
Office of the Law Revision Counsel. 26 U.S.C. 1211 – Limitation on Capital Losses
12
Internal Revenue Service. Instructions for Form 1099-B
13
Internal Revenue Service. Instructions for Form 8949
14
Internal Revenue Service. Form 8949 – Sales and Other Dispositions of Capital Assets
15
Internal Revenue Service. About Form 6252, Installment Sale Income
16
Internal Revenue Service. How Long Should I Keep Records
17
Office of the Law Revision Counsel. 26 U.S.C. 1091 – Loss From Wash Sales of Stock or Securities
18
Office of the Law Revision Counsel. 26 U.S.C. 1031 – Exchange of Real Property Held for Productive Use or Investment
19
Office of the Law Revision Counsel. 26 U.S.C. 6662 – Imposition of Accuracy-Related Penalty on Underpayments
20
Office of the Law Revision Counsel. 26 U.S.C. 6663 – Imposition of Fraud Penalty
21
Office of the Law Revision Counsel. 26 U.S.C. 7201 – Attempt to Evade or Defeat Tax