This article offers a comprehensive overview of U.S. state and federal tax rules for precious metals.
Gold and silver are treated differently from cash, stocks, and bonds. The IRS classifies physical precious metals as “collectibles,” which means different rules apply for purchases, sales, reporting, storage, and inheritance.
Understanding Taxes on Precious Metals
When buying or selling gold and silver, there are two types of taxes to be aware of:
- Sales Tax: A tax on the purchase of goods. Sales tax is governed by state law, and many states offer exemptions or reductions for gold and silver bullion. We’ll explore these state-by-state differences below.
- Capital Gains Tax: A tax on the profit made when selling an asset for more than its purchase price. The IRS treats physical gold and silver as “collectibles,” which subjects them to higher federal tax rates than stocks.
Why Are Precious Metals Considered “Collectibles”?
The Tax Code (IRC § 408(m)) defines “collectibles” as tangible personal property, including gold, silver, platinum, and palladium coins and bullion (as well as art, rugs, antiques, stamps, and alcoholic beverages).
Collectibles have higher tax rates because the IRS considers them luxury property or stores of value rather than “productive” investments like stocks.
Tax Rates on Collectibles
Official IRS guidance (Tax Topic 409) confirms:
- Short-term gains (held ≤ 1 year) are taxed as ordinary income at your federal income tax rate (up to 37%) – same as stocks and bonds.
- Long-term gains on collectibles (held > 1 year) are taxed at a maximum of 28%. This is higher than the standard 0%/15%/20% long-term capital gains rate that applies to stocks and bonds.
The 28% rate is a ceiling, not a flat rate for everyone. This means that long-term gains are taxed at the lesser of your ordinary income tax rate and 28%.
| Your Ordinary Tax Rate | Short-Term Gain Rate (held ≤ 1 year) | Long-Term Gain Rate on Collectibles (held > 1 year) |
|---|---|---|
| 10% | 10% | 10% |
| 12% | 12% | 12% |
| 22% | 22% | 22% |
| 24% | 24% | 24% |
| 32% | 32% | 28% (capped) |
| 35% | 35% | 28% (capped) |
| 37% | 37% | 28% (capped) |
How Collectible Gains are Calculated
Sale Proceeds − Cost Basis = Gain (or Loss)
“Sale proceeds” are the gross amount you receive when you sell your metals.
“Cost basis” is the original purchase price of your metal, adjusted upward by certain allowable costs (such as dealer premiums, commissions, transaction fees, and storage fees).
Are Gold ETFs Considered “Collectibles”?
Yes, gold and silver-backed ETFs are also considered collectibles. Long-term gains are taxed at the 28% rate.
Popular precious metals ETFs (GLD, for example) are structured as grantor trusts that directly hold physical gold or silver. For tax purposes, the IRS treats shareholders as owning a proportional interest in the underlying metal.
Investments in mining company stocks (such as Newmont (NEM) or Barrick (B)) are taxed at regular capital gain rates.
Reporting on Your Tax Return
Whenever you sell gold or silver for a gain (or loss), you are required to report the transaction on your income tax return.
This is done on IRS Form 8949 and Schedule D (Capital Gains and Losses) as part of your Form 1040 filing. The responsibility to report sales and pay tax lies with the seller.
Dealer Reporting (Form 1099-B)
In certain cases, the precious metals dealer or broker who buys your gold/silver from you is required to report the proceeds of your sale to the IRS. The dealer must report your transaction using Form 1099-B and provide you a copy.
Not all precious metals sales are reportable. The IRS only requires 1099-B reporting for sales that meet certain quantity and purity thresholds.
The IRS Code itself does not print specific purity or quantity requirements in the statute text. Instead, it defers to the futures markets.
See the “Sales of precious metals” section in the Instructions for Form 1099-B:
- If a precious metal (gold, silver, platinum, or palladium) is approved by the CFTC to be traded on a regulated futures exchange, the IRS treats it as a standardized, reportable metal.
- Even then, the sale is only reportable when it is sold in large enough quantities. If you sell less than the minimum amount required to make a futures contract, the sale is not reportable.
Specific reportable items and quantities include:
- Gold bars: .995+ fineness, 1 kilo or more
- Silver bars: .999+ fineness, 1,000 troy ounces or more
- Platinum bars: .9995+ fineness, 25 troy ounces or more
- Palladium bars: .9995+ fineness, 100 troy ounces or more
- Certain specific coins in quantities of 25 or more (Gold Maple Leaf, Krugerrand, Mexican Onza)
- Pre-1965 U.S. dimes, quarters, and half dollars (“junk silver”): Face value of $1,000 or more (which is about 715 ounces of silver)
U.S.-minted coins such as American Gold Eagles and Silver Eagles are excluded from dealer reporting. Rare coins (numismatic and semi-numismatic) are also not subject to 1099-B reporting.
These reporting thresholds were negotiated between the Industry Council for Tangible Assets (ICTA) and the IRS in 1992. They are widely used across the industry but are not published in a single authoritative document.
Even when a transaction is not reportable by the dealer, the taxpayer must still report gains on Form 8949 and Schedule D.
Rules for Precious Metals IRAs
To use an IRA for physical metals, you must follow strict rules.
The IRS actually does not allow IRAs to buy collectibles. If you buy a collectible in an IRA, the tax code treats that purchase as a distribution from the IRA (taxed as ordinary income and subject to the 10% early distribution tax if you’re under 59½).
So how do you get around this?
The IRA can hold certain coins and bullion only if the metals:
- meet certain purity standards, AND
- are held by a qualified custodian (you can’t take personal possession).
See IRC § 408(m)(3) for details.
Purity Standards
An IRA can own precious metals only if they fall into one of three buckets:
- Gold, silver, or platinum coins described in section 5112(a) of title 31, United States Code (Congress trusts U.S.-mint coins).
- Any coin issued under the laws of any state.
- Any gold, silver, platinum, or palladium bullion that meets futures market standards.
If someone offers you a “rare coin IRA,” run the other direction!
Qualified Custodians
Under IRC § 408(n), qualified custodians include:
- Banks
- Insured credit unions
- Certain regulated trust companies
The custodian (or “trustee,” or “depository”) must have exclusive custody and physical possession of the metals. They cannot be held in your safe deposit box or under your mattress.
Tax Benefits of Precious Metals IRAs
Many investors hold physical gold or silver within a self-directed Individual Retirement Account (IRA), which provides key tax advantages.
- Traditional IRA: Contributions are tax-free. All taxes are deferred until you withdraw the funds in retirement.
- Roth IRA: Contributions are taxable, but growth and withdrawals are tax-free.
In both a Traditional and Roth IRA, you can buy and sell your metals as much as you want without triggering capital gains taxes.
This is especially advantageous for precious metals because it allows tax-efficient ratio trading. Ratio trading involves selling gold and buying silver (or vice versa) during strategic times.
Required Minimum Distributions (RMDs)
All traditional IRAs are subject to required minimum distributions (RMDs) once you reach the mandatory age.
In a precious metals IRA, there are two ways to satisfy an RMD:
- Sell metals and receive cash.
- Take an “in-kind” distribution of metal (you take delivery of the actual metal out of the IRA instead of selling it).
How are in-kind distributions taxed?
Even though no metal is sold, the IRS still treats this as a taxable distribution (for a Traditional IRA).
The fair market value of the metal on the day it leaves the IRA is counted as ordinary income. That value is what satisfies the RMD requirement. You pay income tax on that amount for the year of distribution.
Sales Tax on Gold and Silver
Sales tax is determined by state and local laws. (Click here to view state-by-state sales tax rates from the Tax Foundation.)
Fortunately, many U.S. states offer sales tax exemptions on precious metals. Coins and bars are often exempt because they are investment products or legal tender, but “fabricated” precious metals such as jewelry are usually still taxable.
States fall into 1 of 4 categories:
- Fully Exempt: These states fully exempt precious metal purchases from state sales tax.
- No Sales Tax: A few states have no sales tax on any goods.
- Conditional Exemptions: These states tax small purchases but waive the tax if you buy above a certain amount.
- Fully Taxable: A handful of states continue to impose regular sales tax on gold and silver purchases.
50-State Precious Metals Sales-Tax Table
Note: Always consult current state statutes of revenue department publications for detailed conditions.
| State | Category | Notes | Citation |
|---|---|---|---|
| Alabama | ✅ Fully Exempt | State sales/use tax exemption on coins and bullion (gold, silver, platinum, palladium), effective 2018. Exemption scheduled to expire May 31, 2028 unless extended. Local sales taxes may still apply. | Ala. Code § 40-23-4(a)(52) |
| Alaska | ✅ No Sales Tax | Local taxes may apply. | Alaska Dept. of Commerce |
| Arizona | ✅ Fully Exempt | No state or local sales tax on “monetized bullion” (coins) or “precious metals bullion.” | Ariz. Rev. Stat. § 42-5159 |
| Arkansas | ✅ Fully Exempt | Repealed its sales tax on gold and silver, treating them as currency. | Ark. Code Ann. § 26-52-454 |
| California | ⚠️ Conditional | “Bulk sales” exemption for purchases of $2,000 or more. | Cal. Code Regs. Title 18, § 1599 |
| Colorado | ✅ Fully Exempt | Exempts gold, silver, platinum, palladium in refined form (locals may differ). | Colo. Rev. Stat. § 39-26-706(4) |
| Connecticut | ⚠️ Conditional | Exempts “gold or silver bullion, legal tender of any nation, rare and antique coins” if ≥ $1,000 transaction value. Connecticut will eliminate the $1,000 threshold in 2027. | Conn. Gen. Stat. § 12-412(45) |
| Delaware | ✅ No Sales Tax | No state or local sales tax on any retail sales. | Delaware Division of Revenue |
| Florida | ✅ Fully Exempt | All sales of investment-grade metals are tax-exempt. Effective August 1, 2025, Florida removed its $500 threshold. | Fla. Stat. § 212.08(7)(ww) |
| Georgia | ✅ Fully Exempt | Covers bullion and legal tender (where value is based on metal content). | O.C.G.A. § 48-8-3(66) |
| Hawaii | ❌ Fully Taxable | Imposes General Excise Tax (GET) on all sales, including precious metals. No exemption for bullion or coins. | Hawaii Rev. Stat. § 237-13 |
| Idaho | ✅ Fully Exempt | Exempts “precious metal bullion” and “monetized bullion” (legal tender coins). | Idaho Code § 63-3622V |
| Illinois | ⚠️ Conditional | Exempts sales of legal tender coins and bullion “with a purity of not less than 980 parts per 1,000” (.980 fine). | 35 ILCS 120/2-5(18) |
| Indiana | ⚠️ Conditional | Exempts sales of (1) coins or (2) bullion that are approved investments for IRAs under IRS rules or (3) U.S. legal tender currency. | Ind. Code § 6-2.5-5-47 |
| Iowa | ✅ Fully Exempt | Exempts sales of coins, currency, and bullion made of gold, silver, platinum, or palladium. | Iowa Code § 423.3(91) |
| Kansas | ✅ Fully Exempt | Enacted “sound money” legislation to recognize gold, silver, platinum bullion and coins as monetary assets and exclude them from sales tax. | K.S.A. 79-3606(mmmm) |
| Kentucky | ✅ Fully Exempt | Removed sales tax on bullion effective August 1, 2024. | KRS § 139.480(37) |
| Louisiana | ⚠️ Conditional | Excludes platinum, gold, and silver bullion from state sales tax. Excludes numismatic coins priced ≤ $1,000 and coins sold at numismatic trade shows. Local taxes may still apply. | La. R.S. 47:301(16)(b) |
| Maine | ❌ Fully Taxable | Charges its 5.5% sales tax on all precious metals sales. Legislative attempts to add an exemption have failed. | Maine Rev. Stat. Ann. Title 36 |
| Maryland | ❌ Fully Taxable | Repealed its previous bullion exemption. Effective July 1, 2025, all sales of gold, silver, platinum, and palladium bullion or coins are subject to 6% sales tax. Exception: sales made at coin shows at the Baltimore Convention Center. | Md. Code, Tax-Gen. § 11-216 |
| Massachusetts | ⚠️ Conditional | Exempts sales of gold or silver coins and bullion when the transaction total ≥ $1,000. Sales under $1,000 are taxed. Platinum and palladium sales are taxable regardless of amount. | Mass. Gen. Laws ch. 64H, § 6(ll) |
| Michigan | ⚠️ Conditional | Exempt if the bullion is at least 90% pure gold, silver, or platinum. (Pending legislation may broaden the definition of exempt bullion.) | MCL § 205.54s |
| Minnesota | ⚠️ Conditional | Exempts sales that are 99.9%+ pure gold, silver, platinum, or palladium. | Minn. Stat. § 297A.67, subd. 34 |
| Mississippi | ✅ Fully Exempt | Exempts all sales of “investment coins, currency, and bullion.” | Miss. Code Ann. § 27-65-111(ba) |
| Missouri | ⚠️ Conditional | Bullion must be at least 90% pure gold, silver, platinum, or palladium to qualify. Coins that are legal tender with market value > face value are also exempt. | Mo. Rev. Stat. § 144.815 |
| Montana | ✅ No Sales Tax | No general sales tax at the state level. | Montana Dept. of Revenue |
| Nebraska | ✅ Fully Exempt | Comprehensive exemption for legal tender and investment-grade gold, silver, platinum, and palladium bullion, coins, ingots, or commemorative medallions. | Neb. Rev. Stat. § 77-2704.66 |
| Nevada | ❌ Fully Taxable | Imposes sales tax on all precious metal retail sales. A 2025 bill (A.B. 359) to create a bullion exemption failed to pass. | Nev. Rev. Stat. § 372.085 |
| New Hampshire | ✅ No Sales Tax | No general sales tax nor local sales tax. | New Hampshire Dept. of Revenue Administration |
| New Jersey | ⚠️ Conditional | Exemption for all “investment bullion,” $1,000 threshold for “investment coin” (effective January 1, 2025). | N.J. Division of Taxation |
| New Mexico | ⚠️ Conditional | New Mexico does not have a sales tax but a Gross Receipts Tax (GRT). Since July 1, 2023, sales of “investment metal bullion” and “investment coins” are eligible for a GRT deduction. | New Mexico Legislature (Senate Bill 174) |
| New York | ⚠️ Conditional | New York exempts investment-grade coins and bullion from sales tax if the purchase is over $1,000, sold by a properly registered dealer (if so required), and the premium over spot is below certain limits. Premium caps: 140% of spot for silver coins, 120% for gold coins weighing 1/4 oz or less, and 115% for other coins and precious metals (gold bars, platinum, palladium). Higher-premium numismatic items are taxable. | N.Y. Tax Law § 1115(27) |
| North Carolina | ✅ Fully Exempt | Exempts sales of bullion and currency/coins for investment. | N.C. Gen. Stat. § 105-164.13(69) |
| North Dakota | ✅ Fully Exempt | Exempts sales of precious metal bullion (refined to .999+ purity) and legal tender coins. | N.D. Cent. Code § 57-39.2-04(31) |
| Ohio | ✅ Fully Exempt | Exempts investment metal bullion and coins. | Ohio Rev. Code § 5739.02(B)(57) |
| Oklahoma | ✅ Fully Exempt | Exempts all forms of bullion valued for metal content and legal tender coins. | Okla. Admin. Code § 710:65-13-95 |
| Oregon | ✅ No Sales Tax | No sales tax in Oregon, state or local. | Oregon Dept. of Revenue |
| Pennsylvania | ✅ Fully Exempt | Exempts sales of legal tender coins and precious metal bullion. | 72 P.S. § 7204(65) |
| Rhode Island | ✅ Fully Exempt | To qualify, bullion must be sold for its metal value (not as jewelry or art) and coins must be legal tender. | R.I. Gen. Laws § 44-18-30(24) |
| South Carolina | ⚠️ Conditional | Exempts sales of gold, silver, and platinum. Palladium remains taxable. | S.C. Code Ann. § 12-36-2120(70) |
| South Dakota | ✅ Fully Exempt | Excludes all forms of legal tender coins and refined bullion from sales tax. | S.D. Codified Laws § 10-45-110 |
| Tennessee | ✅ Fully Exempt | All state and local sales tax is waived on investment-grade metals and legal tender coins. | Tenn. Code Ann. § 67-6-350 |
| Texas | ✅ Fully Exempt | Exempts “gold, silver, or numismatic coins” and platinum, gold, or silver bullion from sales tax. | Tex. Tax Code § 151.336 |
| Utah | ⚠️ Conditional | Utah exempts sales of legal tender coins/currency (U.S. or foreign) and bullion with ≥50% purity. | Utah Code Ann. § 59-12-104(50),(51) |
| Vermont | ❌ Fully Taxable | Imposes regular sales tax on all coin and bullion sales. | 32 V.S.A. § 9771 |
| Virginia | ✅ Fully Exempt | Exempts sales of gold, silver, or platinum bullion and legal tender coins. Expires July 1, 2026 unless extended. | Va. Code Ann. § 58.1-609.1(19) |
| Washington | ❌ Fully Taxable | Washington repealed its long-standing bullion exemption as of Jan. 1, 2026. All sales of precious metal bullion and monetized bullion (coins) are subject to sales tax (state + local). | WA Dept. of Revenue |
| West Virginia | ✅ Fully Exempt | Exempts sales of “investment metal bullion” and “investment coins” (part of WV’s Sound Money law affirming gold/silver as currency). | W. Va. Code § 11-15-9R |
| Wisconsin | ⚠️ Conditional | Exempts sales of coins or bullion if the item contains at least 35% precious metal content (gold, silver, platinum, palladium or copper). This low threshold covers virtually all bullion and many coins. | Wis. Stat. § 77.54(74) |
| Wyoming | ✅ Fully Exempt | Wyoming recognizes gold and silver as legal tender (no sales tax). | Wyo. Stat. § 39-15-101 |
Inheritance and Gifts
Gifts of Precious Metals
If you gift gold or silver to someone during your lifetime (for example, giving a gold coin or bar to a child), this is a non-taxable event for the recipient at the time of the gift. However, the recipient inherits your original cost basis. There is no step-up in basis for gifts.
So if you bought a gold bar years ago for $3,000 and gift it to your son when it’s worth $5,000, his cost basis is still $3,000. If he later sells it for $5,000, he will owe tax on the $2,000 gain, as if he had owned it from the start.
The gift itself might require a gift tax return from you if the value exceeds the annual gift exclusion ($19,000 per recipient in 2026), but that is separate from a tax on the asset’s gains.
Inherited Precious Metals
When someone inherits gold or silver, the tax basis is “stepped up” to the fair market value as of the date of the original owner’s death.
This is very beneficial. It means that if Grandpa bought gold at $300/oz decades ago and at his death it’s worth $5,000/oz, the heirs’ cost basis becomes $5,000/oz. If they sell the metals soon after inheriting, there may be little to no capital gain to tax.
Unrealized gains during the original owner’s life escape capital gains tax entirely under the step-up rule. The step-up in basis makes inheritance a tax-efficient way to transfer wealth.
Estate taxes are a separate consideration and only come into play for large estates or certain state laws. The 2026 federal estate tax exemption is $15 million. Always consult an estate attorney for these cases.
Futures, Options, and the 60/40 Rule
If you trade gold and silver using futures and options contracts, your instruments live under a completely different tax regime than physical bullion, governed by Internal Revenue Code §1256.
Section 1256 contracts are a specific category of exchange-traded derivatives. For precious metals, this typically means:
- COMEX gold futures
- COMEX silver futures
- Options on those futures
These contracts trade on standardized, centrally cleared, and regulated U.S. exchanges. They are not collectibles.
What does “marked to market” mean?
Mark-to-market means that the IRS pretends you sold and repurchased your Section 1256 positions at fair market value on December 31 every year, even if you didn’t actually close the trade. Taxes are calculated annually based on your year-end value.
This rule is mandatory for Section 1256 contracts.
How Section 1256 contracts are taxed (the 60/40 rule)
All gains and losses on Section 1256 contracts (regardless of holding period) are split as follows:
- 60% treated as long-term capital gain
- 40% treated as short-term capital gain
This is called the “60/40 rule.” It often results in a lower effective tax rate, especially for active traders.
Gains and losses are reported on IRS Form 6781 (Gains and Losses From Section 1256 Contracts and Straddles), and then flow through to Schedule D.
How Vaulted Fits Into the Picture
Vaulted was designed to address the frictions investors face with precious metals: sales taxes, complex reporting, higher rates on capital gains, and liquidity constraints.
By offering investment-grade, professionally vaulted metal, Vaulted allows investors to buy and sell gold and silver with the same ease and clarity they expect from modern financial platforms.
Rather than holding metals in a way that immediately creates a “collectible” for tax purposes, Vaulted utilizes a structure that may significantly reduce your tax liability. Clients hold a contractual right to specific, serial-numbered, fully allocated physical metal (available for physical delivery) without the immediate tax inefficiencies that usually come with gold and silver.
Please connect with your Vaulted advisor for more details on the tax implications of your Vaulted holdings.
