Collectibles Tax
Definition
The collectibles tax is the federal capital-gains treatment that applies to physical precious metals held more than a year. Long-term gains on bullion are taxed at a maximum rate of 28 percent, higher than the 0 to 20 percent rates that apply to long-term gains on stocks.
The IRS classifies physical gold and silver as collectibles, which places long-term gains in a different rate category than most other long-term investments.
Why it matters
If you hold metal longer than a year and sell at a gain, the gain is taxed as a long-term gain on a collectible, capped at 28 percent. Your actual rate depends on your income and can be lower than 28 percent, but the ceiling is higher than the top long-term rate on stocks. This difference can affect after-tax returns on a large position.
In practice
Metal sold within a year is treated as a short-term gain and taxed at ordinary income rates instead. The collectibles ceiling applies to physical metal directly; gains held inside an IRA follow that account’s own rules rather than this category.
Common confusion
The 28 percent figure is a maximum, not a flat rate everyone pays. Lower-income sellers may owe less. Tax outcomes vary by individual, so treat the rate as a ceiling and confirm your own situation with a tax professional.