Long-term gains on iShares Gold Trust (IAU) shares are taxed at a federal maximum of 28% rather than the 15% or 20% rate that applies to ordinary stocks. The IRS treats IAU shareholders as direct owners of the physical gold sitting in the trust’s vaults, and gold bullion is a collectible under the tax code. High earners can owe an additional 3.8% net investment income tax on top, bringing the federal ceiling to 31.8% before any state tax.
Why Gold ETF Shares Are Treated as Collectibles
IAU is a grantor trust. Under the grantor trust rules, the trust itself is not a separate taxpayer; the shareholder reports the trust’s income, deductions, and credits directly.1Office of the Law Revision Counsel. 26 USC Subpart E – Grantors and Others Treated as Substantial Owners Owning a share of IAU is treated, for tax purposes, as owning a fractional interest in the underlying bullion.
The tax code’s definition of “collectibles” includes metals, gems, art, antiques, stamps, coins, and alcoholic beverages.2Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts Gold bullion sits squarely inside that list. Buying shares on an exchange rather than a bar from a dealer does not change the classification, because the IRS looks through the trust wrapper to the underlying asset.
The 28% Ceiling on Long-Term Gains
Hold IAU for more than one year and any profit is a long-term collectibles gain.3Office of the Law Revision Counsel. 26 USC 1222 – Other Terms Relating to Capital Gains and Losses The federal tax on that gain is capped at 28%, compared to the 20% maximum for long-term gains on ordinary stocks.4Internal Revenue Service. 2025 Instructions for Schedule D (Form 1040)
The 28% figure is a ceiling, not a flat rate. If your marginal ordinary bracket is below 28%, you pay your lower ordinary rate on the collectibles gain instead. The penalty only bites in the 32%, 35%, and 37% brackets, where the cap replaces a higher ordinary rate but still leaves you owing more than the 20% you would pay on a stock held the same length of time. Investors in the 24% bracket or below effectively pay their ordinary rate on the gain, so the collectibles designation is irrelevant to them in practice.
Short-Term Sales Get Ordinary Rates
Sell within a year and the profit is a short-term capital gain, taxed at your marginal ordinary rate. For 2026, federal income tax rates range from 10% to 37%.5Internal Revenue Service. Federal Income Tax Rates and Brackets The 28% collectibles cap only applies to long-term gains, so a high-income investor who flips IAU inside a year can owe 37% on the profit. Holding a little longer to cross the one-year line saves nine percentage points at the top bracket.
The 3.8% Net Investment Income Tax
A separate 3.8% net investment income tax applies to capital gains, including collectibles gains, once modified adjusted gross income crosses $200,000 for single filers, $250,000 for married couples filing jointly, or $125,000 for married individuals filing separately.6Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax The tax applies to the lesser of net investment income or the amount by which income exceeds the threshold.
For an investor already at the 28% collectibles ceiling, the combined federal rate reaches 31.8%. The equivalent stock gain would top out at 23.8%. State income taxes stack on top of both figures, and states do not typically carve out a lower rate for collectibles.
Small Taxable Events Every Year You Hold
IAU earns no dividends or interest, so the trust covers its sponsor’s fee by selling small amounts of gold throughout the year.7U.S. Securities and Exchange Commission. iShares Gold Trust FWP Because of the grantor trust structure, each of those internal sales is treated as if you personally sold a sliver of your gold. A small taxable gain can appear in a year you never touched your shares.
These micro-sales also reduce your cost basis in the shares you still hold, which increases the gain when you eventually sell. The amounts are tiny per period but compound over years. Treasury regulations do not require brokers to issue a Form 1099-B for these de minimis sales, though some brokers report them voluntarily. If yours does not, you are responsible for calculating the gain or loss using the trust’s supplemental tax information, which iShares publishes annually; the 2025 reporting documents were released on January 30, 2026.8iShares. Tax Documents
Reporting the Sale Correctly
When you sell IAU shares, your broker issues a Form 1099-B showing proceeds and cost basis. You report the sale on Form 8949, which flows into Schedule D of Form 1040.9Internal Revenue Service. Instructions for Form 8949 Long-term collectibles gains go in Part II of Form 8949 because the shares were held more than a year. Short-term gains go in Part I and flow through Schedule D like any other short-term gain.
The 28% rate calculation itself happens on the 28% Rate Gain Worksheet in the Schedule D instructions. Total collectibles gains go on that worksheet, and the result carries to Schedule D, line 18.4Internal Revenue Service. 2025 Instructions for Schedule D (Form 1040) This is where filings go wrong. If the software treats the gain as a standard long-term gain, you may either overpay (paying your ordinary rate) or underpay (paying 15% or 20%). Most major tax programs handle it correctly when the asset is categorized properly, but verify the 28% worksheet ran before you file.
The trust does not issue a K-1. Annual reporting comes through the 1099-B and the trust’s supplemental tax documents, which simplifies filing compared to commodity funds structured as limited partnerships but leaves you responsible for confirming the collectibles classification.
Holding IAU in an IRA or 401(k)
Buying a collectible inside an IRA normally triggers an immediate deemed distribution equal to the purchase price, which is taxable and may carry a 10% early withdrawal penalty if you are under 59½.10Internal Revenue Service. Investments in Collectibles in Individually Directed Qualified Plan Accounts IAU has a carve-out. The trust’s prospectus discloses a private letter ruling from the IRS confirming that buying IAU shares in an IRA or 401(k) is not treated as acquiring a collectible and does not trigger a taxable distribution.11iShares. iShares Gold Trust Prospectus
One caveat matters. If a redemption ever resulted in physical bullion being delivered into the retirement account, that delivery would be treated as a collectible acquisition and taxed accordingly.11iShares. iShares Gold Trust Prospectus For individual investors this is essentially theoretical. The trust only redeems shares in blocks of 50,000 (called Baskets) through authorized participants, not to retail shareholders.
Loss Harvesting Between Gold ETFs
Investors sometimes sell IAU at a loss and immediately buy a competing gold ETF such as GLD or GLDM, hoping to keep gold exposure while booking the loss. The IRS disallows losses on sales of securities if a “substantially identical” security is purchased within 30 days before or after the sale. Whether two ETFs backed by physical gold count as substantially identical is not settled.
The IRS has not drawn a bright line for ETFs tracking the same commodity. The current consensus among tax practitioners is that different gold ETFs are likely not substantially identical, given different sponsors, expense ratios, trust structures, and gold per share. The IRS could take a different view. If the loss is meaningful, documenting the differences between the funds you are swapping strengthens your position if the transaction is ever questioned.