Taxes When You Sell Gold: The Complete Guide (Federal and State)

Why Physical Gold Is Taxed Differently Than Stocks

Most investments qualify for preferential long-term capital gains rates: 0%, 15%, or 20% for stocks and equity ETFs, depending on income. Physical gold does not get those rates.

The IRS classifies physical gold, silver, platinum, and palladium as collectibles under Internal Revenue Code § 1(h)(4). That classification covers:

• Gold coins: American Gold Eagle, Gold Buffalo, Canadian Maple Leaf, South African Krugerrand, and others
• Gold bullion bars and rounds held outside a retirement account
• Silver bullion, junk silver, and pre-1965 U.S. silver coins
• Other precious metals the IRS defines as collectibles

Because collectibles are excluded from preferential rates, the federal maximum on long-term collectible gains is 28%. That ceiling matters most to taxpayers in the 32%, 35%, and 37% brackets. For those in lower brackets, long-term gains are simply taxed at whatever ordinary rate applies, since their ordinary rate already falls below the cap.

The collectibles classification typically covers ETFs that hold physical gold directly, such as major gold trust products. Verify how your specific fund reports gains by reviewing the fund’s prospectus or consulting a tax professional.

Long-Term vs Short-Term Gains: The One-Year Rule

The holding period is the single most consequential variable in how much federal tax you owe when you sell gold.

Short-term gains result when you sell gold held for one year or less (12 months or fewer, measured from the day after purchase through the date of sale). Short-term gains are taxed as ordinary income at your full marginal rate. In 2024, those rates run from 10% to 37%. No special cap applies to short-term collectible gains.

Long-term gains result when you have held the gold for more than one year. The 28% collectibles cap applies here. If your ordinary rate is below 28%, you pay that lower rate instead.

There is no tax advantage to selling gold before the one-year mark unless you have capital losses available to offset the gain, or you expect to be in a materially lower bracket in the near future. If you are approaching the one-year threshold and considering a sale, tracking the exact purchase date is worth the effort. Check your original dealer invoice or order confirmation.

The IRS rules on holding periods and capital gain treatment for collectibles are documented in IRS Publication 550: Investment Income and Expenses.

How to Calculate Your Taxable Gain

Your taxable gain is the sale proceeds minus your adjusted cost basis. Getting the cost basis right is where many sellers undercount, which results in overpaying.

What goes into your cost basis

Included in cost basis:

• The purchase price you paid, including the dealer’s premium over spot price
• Commissions or transaction fees paid at the time of purchase
• Shipping and insurance costs charged by the seller to you at the time of purchase

Not included in cost basis:

• Ongoing storage fees paid after purchase (separate deductibility question; consult your tax advisor)
• Insurance premiums paid after purchase to protect stored metal
• The current or historical spot price of gold (the IRS uses what you actually paid)

Tracking multiple purchases

If you bought gold at multiple times and are selling only part of your holdings, each lot must be tracked separately. Specific identification (you designate which exact coins or bars you are selling and use their purchase price) is generally the most advantageous method. First-in, first-out is also acceptable. Consult a tax advisor on the method that best fits your situation before you sell.

Accurate records are the foundation of accurate reporting. Keep purchase receipts, dealer invoices, wire transfer confirmations, and account statements. The IRS can ask about cost basis years after a sale. See our companion guide on tracking cost basis for physical gold for detailed recordkeeping methods.

The Net Investment Income Tax (NIIT)

Higher-income sellers face a second federal layer on top of the capital gains rate: the 3.8% Net Investment Income Tax, established by IRC § 1411.

The NIIT applies when your modified adjusted gross income (MAGI) exceeds these thresholds, which have not been adjusted for inflation since the tax took effect in 2013:

If your MAGI is above the applicable threshold, the 3.8% applies to the lesser of: (a) your net investment income, or (b) the amount by which your MAGI exceeds the threshold. Capital gains from gold sales count as net investment income.

Combining the 28% long-term collectibles cap with the 3.8% NIIT, the effective maximum federal rate on a long-term gold gain for a high-income seller is 31.8%. Short-term gains, taxed as ordinary income, could face 40.8% (37% plus 3.8%) for those above the NIIT threshold.

The NIIT is calculated and reported on IRS Form 8960. The form instructions walk through the calculation in detail. Consult your tax advisor to confirm whether the NIIT applies to your situation.

How to Report Gold Sales to the IRS

Every gold sale is a taxable event that belongs on your federal return, regardless of whether your dealer issued a Form 1099-B. The absence of a 1099-B does not give you a pass on reporting. It just means more of the documentation responsibility falls on you.

Form 8949 and Schedule D

Report each gold sale on Form 8949: Sales and Other Dispositions of Capital Assets. Each transaction gets its own line:

• Description of the property (example: “5 oz American Gold Eagle coins”)
• Date you acquired the gold
• Date you sold it
• Sale proceeds (total amount you received)
• Your cost basis (what you paid, including premiums)
• Resulting gain or loss

The totals from Form 8949 flow to Schedule D: Capital Gains and Losses, which connects to your Form 1040. Long-term collectibles gains land in Schedule D Part II; short-term gains go in Part I.

When dealers issue a 1099-B and when they don’t

Precious metals dealers are not required to issue a 1099-B on every sale. The IRS requires reporting only when certain quantity thresholds are met, which vary by metal type and coin. Sales below those thresholds generate no 1099-B from the dealer, but your gain is still taxable. You are responsible for reporting it. Our guide to IRS 1099-B reportable bullion items lists the current thresholds by metal and coin category.

Capital losses on gold sales

If you sell gold at a loss (proceeds less than your cost basis), report it on Form 8949 the same way. Capital losses offset capital gains first. If net losses exceed gains in the year, up to $3,000 of the net loss can offset ordinary income in the same tax year. Losses beyond that carry forward to future years. Document every loss with your purchase receipt and the sale confirmation. Consult a tax advisor to confirm how a gold-related loss applies to your full return.

State Income Tax Treatment

State income tax on gold sale gains follows your state’s general income tax rules. Most states do not have a separate collectibles rate; they tax the federal-recognized gain at whatever state income tax rate applies to your income level.

State rates change through legislation. Verify current rates directly with your state’s department of revenue, or with your tax advisor, before filing your return. Our state precious metals tax map tracks state-by-state rules for bullion, including both sales tax exemptions and income tax notes.

California deserves specific mention because of the size of its gold-investing population and the severity of the tax. California taxes gold gains as ordinary income at rates up to 13.3%, with no equivalent of the federal 28% cap. A California seller in the top state bracket selling long-term gold gains could face a combined federal-plus-state marginal rate above 41% (28% federal plus 13.3% California) on a large gain, before the NIIT applies. These are illustrative figures; the actual combined rate depends on your income and specific situation. Consult a tax advisor familiar with California tax law before selling large positions.

Living in a no-income-tax state reduces your total tax bill but does not eliminate the federal obligation. A Texas resident owes the same federal tax on gold gains as a California resident at the same income level. The difference is the absence of the state layer.

Sales Tax vs Capital Gains Tax: Two Different Questions

One of the most persistent sources of confusion around gold taxation is conflating two completely separate taxes. They are different in who pays, when, and why.

Capital gains tax is a seller-side tax on profit. It is federal and state income tax on the gain you realize when you sell gold at a price higher than you paid. You report it on your annual return. The rates described throughout this guide apply here.

Sales tax is a buyer-side tax on the purchase transaction. In most contexts, when you sell your gold to a dealer or private buyer, you are the seller, not the buyer. You do not collect or remit sales tax. The buyer might owe sales tax depending on their state and the nature of the transaction, but that is their obligation.

The confusion is understandable. Many states have passed exemptions on precious metals purchases, and headlines about those exemptions often blur together with questions about income tax. But these are two parallel tracks:

• When you buy gold: does sales tax apply? That depends on your state and the metal type. See our state bullion sales tax map.
• When you sell gold at a profit: do you owe income tax on the gain? Yes, in virtually every case, at the federal rates in this guide plus any applicable state income tax.

A state exempting precious metals from sales tax does not exempt the seller from capital gains tax. These exemptions operate independently and do not offset each other. Clarifying this distinction before you sell can prevent a surprise tax bill you were not expecting.

If you want to estimate your potential gain before deciding to sell, use our gold value calculator to check current market value against your cost basis.