Sales Tax on Gold and Silver by State

Sales tax, use tax and income tax are three separate bills

Sales tax on gold is charged when you buy, under the rules of the state where the metal is delivered. Federal and state income tax apply when you sell at a gain. Mixing the two up is the most common mistake in questions about bullion taxes.

Use tax: the part buyers forget

If you live in a state that taxes bullion and buy from a seller that does not collect your state’s tax, the tax is not waived. It becomes use tax, which you owe directly to your state at the same rate. Large online sellers now collect tax for most states, so use tax matters mainly for purchases from small sellers, private parties and out-of-state shops where you take the metal home yourself.

Local add-ons

In taxing states, county and city sales taxes usually apply on top of the state rate, so the total rate on a bullion purchase can differ between two towns in the same state. The gold price by city page shows how that plays out in major metro areas.

What counts as exempt bullion

Each state writes its own definition, and the details decide whether a given purchase is taxed. The common elements are these.

• A minimum fineness for bars and rounds, written as a percentage of gold, silver, platinum or palladium content.
• Coins that are or were legal tender, sometimes with a requirement that their value comes mainly from metal content.
• Pricing tied to metal value, which excludes items sold mainly for artistry, packaging or novelty.
• Jewelry is excluded everywhere, since it is sold as ordinary merchandise.
• Numismatic coins are treated differently from state to state; some exemptions cover them, others do not.

How purchase thresholds work in practice

Take a hypothetical state that exempts bullion only on purchases over $1,000.

1. An order of silver rounds totaling $950 is taxed in full.
2. Adding one more round to bring the order to $1,050 makes the whole order exempt.
3. A purchase of exactly $1,000 is taxable if the law says “over $1,000,” but exempt if it says “$1,000 or more.”
4. Splitting a large order into several small invoices can make each one taxable.
5. Some states measure the threshold per transaction and others per invoice or per item type, so the statute’s wording decides.

Coins as legal tender

American Gold Eagles are U.S. legal tender with a face value of $50 on the 1 oz coin, far below their metal value. Some state exemptions refer specifically to legal-tender coins, which is why coin and bar treatment can differ in the same state. Coin specifications are on the American Gold Eagle page.

Silver and platinum follow the same rules

State bullion exemptions nearly always cover silver, and often platinum and palladium, under the same definitions as gold. Silver buyers feel threshold rules most, because a typical silver order is smaller in dollar terms. The silver price page tracks that market.

Federal income tax when you sell bullion

For federal purposes, gold, silver, platinum and palladium bullion are collectibles. Gains on metal held more than one year are taxed at your ordinary income tax rate, capped at 28%. Gains on metal held a year or less are taxed as ordinary income. The 3.8% net investment income tax can apply on top for higher-income taxpayers.

A worked example of the 28% cap

1. You buy 10 oz of gold coins at an example price of $2,000 per ounce and pay $600 in premiums and shipping. Your cost basis is $20,600.
2. Three years later you sell to a dealer at an example $2,900 per ounce, receiving $29,000.
3. The long-term gain is $29,000 − $20,600 = $8,400.
4. If your ordinary tax bracket is 24%, the gain is taxed at 24%, or $2,016.
5. If your bracket is 32% or higher, the 28% cap applies, for $2,352.

Premiums, shipping and selling fees all count, raising your basis or reducing your proceeds. Keeping invoices is what lets you claim them.

Form 1099-B in general terms

Dealers file Form 1099-B with the IRS for certain bullion sales, based on the specific product and the quantity sold. Many sales do not trigger a form. Reporting does not change what is taxable: a gain is taxable whether or not a form is filed, and a loss can be claimed either way.

When the holding period starts

Long-term treatment requires holding the metal for more than one year. The holding period starts on the day after you buy, so gold bought on March 10 must be sold on March 11 of the following year or later to count as long-term. Selling a day early turns the whole gain into short-term ordinary income.

Inherited and gifted bullion

Gold you inherit generally takes a basis equal to its fair market value on the date of death, and any later gain is treated as long-term regardless of how long you hold it. Gold received as a gift keeps the giver’s original basis, so the giver’s purchase records matter to you.

Losses

A loss on bullion held as an investment is a capital loss. It offsets capital gains first, and up to $3,000 of any remaining net capital loss can offset ordinary income each year, with the rest carried forward. Losses on personal-use items such as jewelry you wore are generally not deductible.

Checking the current rule before you buy

State bullion rules change more often than most tax rules, as the recent changes listed above show. A rule that applied to your last purchase may not apply to your next one.

• Read your state department of revenue’s current publication or bulletin on precious metals, and check its effective date.
• Check whether the exemption has a sunset date, since some are enacted for a fixed number of years.
• Look at the tax line on the seller’s checkout page or invoice before paying.
• Ask whether local option taxes apply in your county or city.
• For large purchases, confirm the treatment of the exact product, since coins and bars can be treated differently.

Where to put the savings to work

Sales tax is often the largest single cost difference between two otherwise identical purchases, larger than the gap between two sellers’ premiums. The buying guide covers the other costs to compare.

When you later sell, the selling guide explains how payouts are set and what records to keep for the income tax side.

To estimate the tax on a planned purchase, start from the live gold price, add the seller’s premium, and apply your state’s combined rate if bullion is taxed where you live.

This is general information

Nothing on this page is tax advice for your situation. For a large purchase or sale, confirm the rules with your state and with a tax professional who can see your full return.