Gold and silver are often treated by the IRS as “collectibles,” meaning profits can be taxed up to 28%—a sharper rate than the 0%, 15% or 20% range typically applied to stocks. The bill depends on how long you hold, your income level, whether the investment is
He thought he was buying a quiet hedge.
Gold and silver can steady a portfolio when the market feels unpredictable—but the tax code doesn’t treat them like stocks and bonds. When investors sell precious metals at a profit. the Internal Revenue Service generally classifies most of these assets as “collectibles. ” which can push the maximum capital gains rate as high as 28%.
That difference—between what many people assume and what the IRS applies—can change how much profit actually makes it into an investor’s pocket.
Precious metals aren’t taxed the same as stocks
For many investors, capital gains on stocks are the baseline they know: rates are typically 0%, 15% or 20%, depending on taxable income. Precious metals move differently. In most cases. the IRS taxes gains on gold and silver as collectibles. so the rate is tied to the taxpayer’s marginal income tax rate. capped at 28%.
The key timing point is straightforward: capital gains taxes are generally paid only when you sell your holdings.
Holding period also matters. If precious metals are held for one year or less, gains are treated as short-term capital gains and taxed as ordinary income—just like short-term stock gains.
What the IRS taxes as collectibles
The IRS definition of “collectibles” extends beyond gold and silver. It includes metals, coins, gems and other tangible items of value, such as works of art or antiques.
Under those rules, most forms of precious metals are taxed at the same general collectibles rate. That includes bars and coins of silver, gold, platinum and palladium.
There are exceptions. Some forms are not considered collectibles, including certain coins, some bullion in IRAs, and non-physically backed ETFs. Those holdings follow their own tax rules.
Why the tax code draws this line
Economist Purba Mukerji of Connecticut College said the approach is deliberate. In her view, the tax code is designed to encourage people to hold savings in U.S. dollars rather than in potential rivals like precious metals.
What tax rate will you pay on gold and silver gains?
The 28% collectibles rate is a maximum. Many taxpayers will pay less.
If a person’s ordinary income tax rate is lower than 28%, precious metals gains are generally taxed at that lower rate instead.
Eliot Bassin, an accountant, financial planner and partner at Fiondella, Milone & LaSaracina LLP, explained the mechanics with an example: if a taxpayer’s marginal tax rate is 22%, they would pay tax at their marginal rate.
Bassin also illustrated how the numbers land. If someone bought gold for $1,000 and later sold it for $2,000, the taxable gain would be $1,000. At a 22% tax rate, the federal capital gains tax would be $220. Under the maximum 28% collectibles rate, the tax would be $280.
The actual bill can also change depending on additional taxes, including the Net Investment Income Tax (NIIT).
Who pays the 28% rate, and when does it show up?
The 28% rate only comes into play if a taxpayer’s ordinary income tax rate would otherwise be higher than 28%.
IRS guidelines tie that threshold to income. It generally applies to single earners making more than $201,775 per year and married couples filing jointly making more than $403,550 per year.
Just like other capital gains, taxes generally apply to realized gains—meaning the tax is triggered only when the investor sells the metal at a profit.
High earners may also face the 3.8% NIIT
Even if the collectibles rate caps at 28%, some investors may owe more through the Net Investment Income Tax.
The NIIT is 3.8%, and it typically applies when modified adjusted gross income exceeds $200,000 for individuals or $250,000 for married couples filing jointly. In those cases, selling precious metals for a gain can trigger the additional tax on top of the 28% collectibles capital gains rate.
How the IRS may learn about a sale
Investors aren’t left to guess how reporting works. The IRS can learn about precious metal sales in multiple ways.
Some precious metal dealers are required to file information returns with the IRS for certain transactions that meet specific reporting thresholds.
And if an investor sells through a brokerage account—such as a gold or silver ETF—the transaction may be reported on tax forms sent both to the investor and the IRS.
But reporting isn’t automatic for every sale. Even if a transaction isn’t reported by a dealer or financial institution, taxpayers are still responsible for accurately reporting taxable gains on their federal income tax return.
Long-term vs. short-term: the one-year cutoff
When investors ask about precious metals taxes, one number comes up again and again: one year.
The 28% collectibles rate applies to long-term gains, meaning gains on metals held for more than one year.
If precious metals are sold after one year or less, any profit is treated as a short-term capital gain and taxed as ordinary income.
A sample scenario shows the difference in time. If someone bought $1,000 worth of gold and sold it 10 years later for $2,000, the profit would be a $1,000 long-term capital gain. Because physical gold is generally treated as a collectible. that gain would be taxed at the marginal tax rate. up to a maximum of 28%.
The example also notes the limit of the illustration: it does not account for state taxes, transaction costs or the NIIT, which may apply to some higher-income investors.
Gold and silver ETFs don’t usually dodge the collectibles rate
For investors who want exposure without handling coins or bars, exchange-traded funds can look like an easy workaround. But the IRS generally treats physically backed ETFs similarly to selling the underlying metal.
Geoffrey Schmidt, a CPA and financial educator specializing in retirement and tax strategy, said investors who buy an ETF thinking they “sidestepped the collectibles rate” often didn’t. Funds like GLD and SLV hold physical metal, and selling shares is treated as selling the bullion itself.
So the 28% collectibles capital-gains cap still applies in those cases.
How gold IRAs are taxed
Some tax advantages show up when precious metals are held inside retirement accounts.
Gold IRAs generally follow the same tax rules as other self-directed IRAs. Because the metals are held inside a tax-advantaged retirement account, investors typically do not pay capital gains taxes when gold or silver is sold within the account.
Taxation generally occurs when money is contributed to or withdrawn from the IRA, depending on the type of account.
For traditional gold IRAs, contributions may be tax deductible and tax deferred, while withdrawals in retirement are generally taxed as ordinary income.
Roth gold IRAs are funded with after-tax dollars, but qualified withdrawals in retirement are typically tax free.
That structure means investors can potentially avoid the 28% collectibles capital gains rate while assets remain inside the IRA—though standard IRA contribution limits, distribution rules and penalties still apply.
Precious metals losses can sometimes offset gains
Tax rules for losses generally track broader capital asset principles. Losses on investment-grade precious metals are generally tax deductible.
Investors can use capital losses to offset capital gains from other investments, potentially reducing overall tax liability.
For example, if someone sells gold at a loss and also realizes gains from stocks, mutual funds or other investments during the same year, the loss may offset some or all of those gains.
If capital losses exceed capital gains, a portion of the remaining loss may be deducted against ordinary income, and unused losses can be carried forward to future tax years.
But losses on items purchased primarily for personal use—such as gold jewelry, collectible coins or other personal possessions—are generally not tax deductible.
Sales taxes are separate from capital gains tax
When people compare the “cost” of gold, they often mix up two different tax systems: sales taxes on purchases and capital gains taxes on profits.
There is no federal sales tax on precious metals like gold and silver. Many states also offer full or partial sales tax exemptions for precious metal purchases.
Rules vary by state, but these exemptions often apply to bullion coins, bars and rounds that meet certain purity or purchase-value requirements.
If a state does impose sales tax on precious metals, the tax is typically collected at the time of purchase and increases the upfront cost. That is separate from any capital gains tax owed later if the metals are sold for a profit.
Before buying, investors are advised to check their state’s current rules or ask their dealer whether sales tax applies.
Capital gains tax FAQs
The question many investors land on is whether the rate is always 28%.
No—gains on precious metals are taxed at the marginal tax rate, with a cap of 28%.
Gold is usually taxed higher than stocks: capital gains on gold can be taxed as high as 28%, while stock capital gain taxes can go as high as 20%.
Silver is taxed the same as gold under the collectibles framework.
Capital gains taxes on gold can be reduced by holding precious metals in a gold IRA, which offers tax advantages. Investors may also work with a financial planner to time sales and optimize strategies such as tax-loss harvesting.
As for a “six-year rule,” the guidance here is blunt: there is no general U.S. federal capital gains tax rule that applies after six years of ownership. For precious metals, the key threshold is one year. Holdings sold after more than one year qualify for long-term capital gains treatment. while holdings sold after one year or less are taxed as short-term gains.
In that setup, the IRS generally taxes physical gold and silver as collectibles, with long-term gains taxed at the marginal tax rate up to a maximum of 28%.
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