Selling Gold in Michigan: The 90% Purity Rule, Dealer Act, and Taxes

Michigan sits in a favorable position for sellers of investment-grade metals. The combination of the sales tax exemption for high-purity items and the relatively straightforward application of the Michigan Precious Metal and Gem Dealer Act gives sellers of standard bullion a predictable set of rules. Sellers of scrap gold or low-purity jewelry face a different picture on taxes and a greater likelihood of the dealer act’s scrutiny. Understanding which profile fits your situation determines what to expect at every step.

Michigan’s Sales Tax Exemption for Precious Metals

Michigan imposes a 6% sales tax on most purchases of tangible personal property. The state created a specific carve-out for investment-grade precious metals, codified under MCL 205.54s. The statute exempts the sale of coins and bullion composed of gold, silver, platinum, or palladium that meet the applicable purity standard. The purity threshold that triggers the exemption is at or above 90%.

That 90% floor is the dividing line between the two seller profiles this guide addresses. A seller bringing in a 1-ounce American Gold Eagle, which is 91.67% gold by weight, or a roll of pre-1965 U.S. quarters, which are 90% silver, is well inside the exemption. A seller bringing in a tray of 14-karat gold rings, which are 58.3% gold, is not.

The practical effect: dealers buying exempt bullion or coins from you do not collect Michigan sales tax on the transaction. The tax question on your end, as the seller, is about income, not sales tax. Sales tax on precious metals typically runs in one direction, at the point of purchase. When you are the one selling, the exemption’s main relevance is that it confirms your metals are treated as investment property rather than ordinary consumer goods, which aligns with how Michigan and federal tax law treat investment coins and bullion. Arizona sets its own purity line and sales tax approach; Selling Gold in Arizona covers how the rules differ there.

For the complete state-by-state picture, see our guide to sales tax on bullion by state.

Two Seller Profiles: How Your Metals Determine Your Experience

The purity line and the dealer act together create two distinct experiences for Michigan sellers. Identifying your profile before you walk into a dealer saves time and avoids surprises.

Note that sterling silver at 92.5% purity does meet the threshold. Sellers of sterling flatware, candlesticks, or hollow ware are in the same position as bullion sellers for sales tax purposes. The key question to ask about any item is its actual metal content by weight, not what it looks like or what it cost originally.

The 90% Purity Rule in Practice

Standard investment bullion was designed with tax exemption eligibility in mind. The United States Mint specifies the metal content of every coin it produces. For the purposes of the Michigan exemption, the relevant figures are:

One item worth noting: the American Gold Eagle is 22-karat, meaning it contains copper and silver alloy in addition to gold. The total weight of the coin is greater than one troy ounce, but the gold content is exactly one troy ounce. Its purity of 91.67% gold still clears the 90% threshold. Krugerrands follow the same alloy formula and qualify on the same basis.

If you are unsure about the metal content of an item you own, a reputable dealer can conduct an XRF (X-ray fluorescence) test or acid test on-site. You can also estimate the value yourself using our gold value calculator once you know the karat or purity.

The Michigan Precious Metal and Gem Dealer Act

Michigan’s Precious Metal and Gem Dealer Act governs businesses that buy precious metals and gems from members of the public. Its intent is to create a paper trail that deters the fencing of stolen property, which historically entered the market through scrap dealers. If you are selling metals to a dealer, this act shapes what the dealer will ask of you and what they can do with your items immediately after purchase.

What the Act Requires of Dealers

1. Registration with local law enforcement Dealers must register with the local police department or sheriff’s office in the jurisdiction where they conduct business. The registration process and fee structure are set at the local level within the framework the state act establishes.
2. Transaction records For each purchase from a member of the public, the dealer must record: the date of the transaction, a description of the items purchased (type, weight, markings), the price paid, and identifying information from the seller, typically a government-issued photo ID. This record is typically made available to law enforcement on request.
3. Mandatory holding period The act requires dealers to hold purchased items for a period before reselling or altering them. This holding period gives law enforcement time to cross-check the records against reported thefts. The specific number of days in the current version of the act should be verified in the act’s text or at michigan.gov; do not rely on informal estimates from dealers or third-party websites, as the requirement can be modified by local ordinance.

What This Means for You as a Seller

Bring a valid, government-issued photo ID to any transaction. Without it, a compliant dealer cannot legally complete the purchase. Be prepared for the dealer to record your ID information. This is standard procedure and not a sign of distrust; it is what the law requires of them.

The holding period means your cash is not at risk, but the dealer cannot immediately melt or resell your items. If you are selling scrap jewelry, this can matter if you are comparing a dealer’s offer with an online or mail-in buyer, where the logistics are different anyway. For investment bullion, the holding period is largely invisible to the seller once payment is made.

Sellers of investment bullion and junk silver generally move through the process quickly because these items are straightforward to identify, weigh, and price. Scrap jewelry requires more assessment time (testing for karat, weighing, estimating refining yield), and some dealers will send scrap to a refiner rather than holding it for resale, which affects how they calculate their offer. Illinois dealer regulations follow a different structure than Michigan’s; Selling Gold in Illinois explains what sellers encounter there.

Michigan and Federal Taxes on Your Profit

The sales tax exemption tells you whether a dealer collects tax at the point of transaction. A separate question entirely is whether your profit from the sale is taxable income. It is, at both the federal and Michigan state level.

Federal Capital Gains on Gold and Silver

The IRS classifies physical gold and silver as collectibles under Internal Revenue Code Section 408(m). When you sell a collectible at a profit after holding it for more than one year, the long-term capital gains rate for collectibles is capped at 28%. This is higher than the preferential 15% or 20% long-term rates that apply to most stocks and bonds held for more than a year.

If you hold the metals for one year or less before selling, any gain is taxed as short-term capital gain, meaning at your ordinary income rate, which can be higher than 28% for some taxpayers. Your cost basis is what you paid for the metals originally, including any purchase premiums. Careful recordkeeping matters: save every receipt, invoice, or statement from when you bought. For metals inherited as part of an estate, the basis typically steps up to the fair market value on the date of the original owner’s death, which can significantly reduce your taxable gain.

For a full treatment of federal tax obligations when selling, see our guide to taxes when you sell gold: the complete guide.

The IRS requires dealers to file a 1099-B form in certain circumstances when purchasing metals from sellers. Requirements vary based on the type of metal, quantity, and form of payment. This reporting obligation sits with the dealer, not with you, but it means the IRS may receive a record of certain transactions. Consult your tax advisor about your specific situation and reporting obligations.

Michigan State Income Tax

Michigan taxes capital gains as ordinary income at the state’s flat income tax rate. Unlike the federal system, Michigan does not apply a preferential rate to capital gains from collectibles versus other investment income. Your gain from selling gold or silver is taxed at the same Michigan flat rate as wages or interest income. Pennsylvania takes a different approach to investment income; Selling Gold in Pennsylvania covers how that state handles gains on metals.

Michigan’s flat income tax rate is set by statute and has been adjusted by the legislature in recent years. Verify the current rate at michigan.gov/taxes before filing, as the rate applicable to your tax year may differ from rates you have seen cited in older articles. As of this writing, Michigan’s rate is a flat percentage applied uniformly to all taxable income.

Michigan does not have a separate state capital gains tax rate. The gain flows through your Michigan individual income tax return as ordinary income. If you had a loss on your sale (sold for less than your cost basis), that loss is generally deductible, subject to the passive loss and capital loss rules applicable at the federal level, and Michigan generally conforms to these federal rules.

How to Find the Best Price When Selling in Michigan

Dealers in Michigan who buy bullion and coins generally price based on the spot price of the underlying metal at the time of transaction, with a dealer margin (“spread”) deducted from spot. That margin varies widely by dealer, metal type, and item liquidity. A roll of pre-1965 dimes is easier for a dealer to resell than a collection of mismatched foreign coins, so the spread is typically tighter on common items.

To find what Michigan buyers are currently paying, browsing the Michigan gold dealer directory and the Michigan coin dealer directory on Goldiew gives you a map of registered, reviewed businesses in your area. Before committing to any single buyer, you can also post a free request on Goldiew’s sell-gold marketplace, which sends your item description to up to 15 verified buyers who respond with sealed offers, giving you a real competitive baseline without walking store to store.