Your Guide to Paying Taxes on Precious Metals
At a Glance:
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- Some states require sales and capital gains tax collection for bullion purchases.
- All investors need to pay federal capital gains taxes after selling precious metals.
- Your exact tax burden depends on your state and the size of your collection.
Your Guide to Paying Taxes on Precious Metals
The tax season can be stressful for precious metal investors. State tax laws regarding gold and silver are constantly changing, and it can be tough to keep up. Although precious metal taxes can be difficult to understand, we’ve got you covered.
This is your guide to paying taxes on precious metals. The (very) short explanation is that investors in certain states will pay sales taxes when they purchase precious metals and state capital gains taxes when they sell, but all U.S. investors are responsible for paying the federal capital gains tax when they profit from selling bullion.
Looking for more detail? Keep reading – we’re walking investors through everything they need to know about paying taxes on precious metals.
Sales Taxes on Bullion | A State-By-State Breakdown
There is no federal sales tax. Five states have no sales tax: Oregon, Montana, New Hampshire, Alaska, and Delaware. For the 45 other states in the union, sales taxes are collected for certain purchases. Investors pay these taxes when they buy items.
Many states don’t collect sales taxes for specific types of bullion products. Washington, for example, only requires that a sales tax be collected for processed bullion, copper products, and accessories. Each state has its own rules for how bullion products are taxed, and dealers are required to stay up-to-date with the law and collect tax for taxable sales they make to customers.
In the past few years, several states have passed laws to eliminate sales taxes for gold and silver products. With new laws in Georgia, Kentucky, Wisconsin, and Kansas on the docket for 2024, the landscape for precious metal taxation is constantly changing.
Which States Have No Sales Taxes for Precious Metals?
Wisconsin recently became the 44th state to eliminate sales taxes for precious metal products. Most states now provide some sort of sales tax exemption for certain precious metal purchases, although the exact products eligible for exemption vary from state to state.
The following states collect no sales taxes for anything – including precious metals:
- Oregon
- Delaware
- Montana
- New Hampshire
- Alaska (local sales taxes may apply)
Some states exempt certain precious metal products from sales taxation, regardless of monetary value or purity. States with sales tax exemptions for some precious metals include:
- Arizona
- Arkansas
- Colorado
- Georgia
- Idaho
- Wisconsin
- Iowa
- Kansas
- Mississippi
- Missouri
- Nebraska
- Nevada
- North Carolina
- Oklahoma
- Pennsylvania
- Rhode Island
- South Carolina
- Tennessee
- Texas
- Virginia
- Washington
- West Virginia
- Wyoming
Other states apply purity requirements to tax-exempted precious metal purchases, but do not factor the cost of a purchase into whether or not a sales tax is required. These states include:
- Alabama (.90 purity and above)
- Illinois (.98 purity and above)
- Indiana (purity minimums apply)
- Michigan (.90 purity and above)
- Minnesota (bars only – .999 purity and above)
- New York (additional rules apply)
- North Dakota (.999 purity and above)
- Ohio (purity minimums apply)
- Utah (.50 purity and above)
- Wisconsin (.35 purity and above)
Finally, six states exempt precious metals from sales tax if the total cost of an order meets a minimum value. These states include:
- California ($2,000 minimum)
- Connecticut ($1,000 minimum)
- Florida ($500 minimum)
- Louisiana ($1,000 minimum)
- Maryland ($1,000 minimum)
- Massachusetts ($1,000 minimum
Sales tax collection for precious metals can be complicated and varies from state to state. When investors buy gold and other products from Hero Bullion, we automatically calculate sales taxes at checkout. Before you buy, be sure to read up on the sales tax requirements for your state.
Capital Gains Taxes For Precious Metals
Sales taxes are paid by investors when they buy bullion products, but metal stackers also have another tax burden to deal with when they sell their coins, bars and rounds. Capital gains taxes are paid if they sell precious metal investments for a profit.
These taxes can vary based on an investor’s marginal tax rate, how long the investments were held, and the nature of the assets liquidated.
Standard Tax Rate For Bullion Capital Gains
When you sell precious metals for a profit, you’re responsible for paying capital gains taxes. The IRS considers precious metal products to be investment-grade collectables. Because of this, the standard capital gains tax rate for precious metals is 28%.
Remember: capital gains taxes are only assessed after you sell precious metals, including gold coins and bars.
Long Vs. Short Term Holdings | Different Bullion Tax Rates Explained
Capital gains taxes are only triggered when investors hold onto a given investment for more than one year. If you keep a gold or silver product for more than a year, you’re on the hook for a 28% capital gains tax when you choose to sell.
Profits from precious metals sold in less than one year are still taxed, but the percentage due is equal to your marginal tax rate. In other words, someone who buys an American Gold Eagle for $2,000 and sells it for $100 in nine months will need to pay taxes on that $100. If this investor’s marginal tax rate is 28%, they’d pay $28 in capital gains taxes on the sale.
| Short Term Capital Gains | Long Term Capital Gains |
|---|---|
| Held for Less Than 1 Year | Held for Over 1 Year |
| Normal Income Tax Rate | Marginal Tax Rate – Max 28% |
| Losses < $3,000 Deductible | Losses < $3,000 Deductible |
Marginal tax rates can exceed the 28% standard capital gains tax rate for gold coins, so some investors could pay up to 37% when they sell gold coins or bars in less than one year. The more money someone makes, the higher a price they’ll pay in short-term capital gains taxes.
State Capital Gains Taxes For Precious Metals
Some states also have their own capital gains tax. Investors will need to pay this on top of the tax they pay to the federal government after selling their bullion coins, bars, or rounds. Each state has its own rules for capital gains taxes, so investors should check their own state’s requirements.
A few states have exempted precious metals from capital gains taxes. Bills currently being debated in Oklahoma and Missouri would eliminate state capital gains taxes for both gold and silver.
Understanding Bullion Tax Laws
Navigating tax rules for gold, silver, and other precious metals can be complicated. Investors will pay state sales taxes when they buy certain bullion products, depending on their state’s regulations. After selling coins, bars, and rounds, investors also need to pay a capital gains tax. This tax can vary based on how long they held their investments, as well as their marginal tax rate and any applicable state capital gains taxes.
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About The Author
Michael Roets
Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.