Updated: August 13, 2026
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Selling a gold coin or bar you bought years ago should be a straightforward capital-gains event. The federal tax rules do not treat it that way. Physical gold sits in a separate class called collectibles, and the ceiling on the long-term rate is nine or thirteen percentage points higher than the stock rate most retirees have memorized.
This page walks through how the classification works, what the 28 percent ceiling costs in raw dollars on a realistic sale, and where cost basis comes from. It also covers when the dealer files a 1099-B on your sale, and how the same gain would be handled inside a gold IRA. Educational only, aimed at owners of taxable-account bullion who want to price the tax before they sell.
How the IRS classifies physical gold for capital gains
Two sections of the Internal Revenue Code do the work. Section 408(m) defines the term “collectible” and lists what belongs in the bucket: works of art, rugs, antiques, gems, stamps, coins, alcoholic beverages, and any metal. That last phrase captures gold bullion, gold coins, silver, platinum, and palladium in physical form.
Section 1(h) then sets the tax rate on the gain. Subsection (h)(4) defines “collectibles gain” as any gain from the sale of a collectible held more than one year. Subsection (h)(5) caps the rate on that gain at 28 percent, or the taxpayer’s ordinary rate if lower.
The classification is asset-based, not intent-based. It does not matter whether you bought the coin as an investment, as a hedge, or as a keepsake. If you sell it at a gain after holding more than a year, the collectibles rate applies. The IRS Topic 409 summary states the rule in plain language on a single page.
Short-term versus long-term, and where the 28 percent ceiling actually sits
The one-year holding-period rule that governs stocks also governs physical gold. A coin sold within one year of purchase produces short-term gain, taxed at ordinary income rates, exactly like a fast trade on a stock. Nothing special happens to a short-term collectibles gain: the character does not matter until the one-year clock is past.
Past the one-year mark, the gain becomes long-term collectibles gain. Here the 28 percent ceiling kicks in. The number is a ceiling, not a floor. If the taxpayer’s marginal ordinary rate is below 28 percent (for instance, a retiree in the 22 or 24 percent bracket), the gain is taxed at that lower ordinary rate.
For most retirees with a mid-five-figure or larger gain, the marginal bracket ends up either at or above the 28 percent line. That is where the trap actually bites: the taxpayer expected the 15 or 20 percent long-term rate that applies to stock gains, and the return prep produces a 24, 28, or 31.8 percent figure instead.
The character adjustment happens on the 28 Percent Rate Gain Worksheet inside the Instructions for Schedule D (Form 1040). A tax preparer working from a raw dealer report without the collectibles flag can miss it. A preparer working from IRS Publication 550 will catch it.
A worked example on a 60,000 dollar long-term gain
Consider a hypothetical retiree, age 68, filing jointly, whose marginal ordinary bracket is 24 percent. She bought $40,000 of American Gold Eagles from a local dealer in 2026 minus seven years. She sells the position for $100,000 today. Long-term gain: $60,000.
Her mental math, framed by the 15 percent long-term rate she pays on her S&P 500 index fund gains: $60,000 times 15 percent equals $9,000 in federal tax. The actual bill under the collectibles rule: $60,000 times 24 percent (her ordinary bracket, which sits below the 28 percent ceiling) equals $14,400. Raw dollar gap: $5,400 more than she expected.
Now change one variable. Same $60,000 gain, but the retiree is in the 32 percent bracket because of pension income and a large required minimum distribution. The 28 percent ceiling now binds: $60,000 times 28 percent equals $16,800 in federal tax. If the taxpayer’s income also crosses the net investment income tax threshold under Section 1411, the extra 3.8 percent stacks on top, producing an effective federal rate of 31.8 percent on the collectibles gain.
None of these numbers are unusual for a household selling a decade of accumulated bullion in a single year. The character mismatch is not a niche edge case: it is the default treatment.
Cost basis: what actually reduces your gain
Cost basis is what you paid to acquire the coin or bar, plus certain acquisition costs. On physical gold, that number is often larger than the taxpayer remembers because the dealer premium (the markup above spot price) is part of basis, not a separate expense.
Basis on a bullion purchase includes several line items. The spot-metal price at the time of the trade. The dealer premium per ounce. Sales tax paid at purchase, in states that levied it. Shipping and insurance charged by the dealer when bundled into the invoice. Any assay or authentication fee paid at acquisition. All of these reduce the taxable gain when the piece is eventually sold.
What does not go into basis: safe-deposit-box rental, home safe purchase, insurance carried during the holding period, and interest on money borrowed to buy the coin. Those are holding-period costs, not acquisition costs. They can sometimes be deductible as investment expenses, but they do not lift the basis figure on the sale.
The proof-of-basis burden falls on the seller. Dealer invoices, wire receipts, credit card statements, and the dealer’s own account history are all acceptable records. A taxpayer who bought coins twenty years ago and has no receipt will have a hard time defending anything above scrap-value basis if audited. IRS Publication 550 covers the general capital-asset basis rules that apply to bullion.
What the dealer actually reports to the IRS on your sale
Precious-metal dealers report certain customer sales to the IRS on Form 1099-B, “Proceeds from Broker and Barter Exchange Transactions.” The trigger is not the dollar amount of the sale. It is whether the product and quantity match a set of reportable items keyed to regulated futures contract specifications.
Large bar sales (for example, a 1-kilogram gold bar or a 100-ounce gold bar) and large quantities of certain foreign gold coins (Krugerrand, Mexican Onza, Canadian Maple Leaf, above a threshold count) usually trigger the report. American Gold Eagles and American Gold Buffalos, minted under a US Mint program that fell outside the futures-contract reference list, have historically not been reportable at the dealer level.
The dealer’s compliance desk knows the current list. Any bullion seller can (and should) ask, at the point of sale, whether the specific transaction will produce a 1099-B. The IRS Form 1099-B page and the Form 8949 page describe the downstream reporting flow on the taxpayer’s return.
A key point that trips up sellers: a dealer 1099-B is not required does not mean the sale is untaxed. The gain is still reportable by the taxpayer on Schedule D whether or not the dealer sent a form. The reporting requirement runs one way, from dealer to IRS. The tax liability runs on the taxpayer regardless.
The 10,000 dollar cash reporting rule (Form 8300)
A separate rule captures cash side of the transaction. Under Treasury regulation 31 CFR 1010.330, any trade or business that receives more than $10,000 in cash in a single transaction (or in related transactions) must file Form 8300 with the IRS. The rule captures precious-metal dealers just like it captures car dealers or jewelers.
“Cash” in this rule has a specific meaning. Physical currency counts. Cashier’s checks, money orders, and traveler’s checks under $10,000 each also count, if received in a designated reporting transaction. Personal checks, bank wires, and ordinary bank transfers do not count as cash for Form 8300 purposes.
The rule captures structuring, which is the deliberate splitting of a transaction to stay under the threshold. Two related transactions of $6,000 each within a 24-hour window still trigger a Form 8300 filing, and structuring itself is a separate federal offense.
Form 8300 is a currency-transaction report, not a tax assessment. It does not change what you owe on the sale. It does mean the IRS knows the cash side of the transaction happened.
State income tax stacks on top
State income tax on a bullion sale works the same way it works on any capital gain. The state calculation starts from federal adjusted gross income and layers the state rate on top. State capital-gains rates range from zero (in states with no income tax) to over 13 percent in the highest-rate states, applied to the same gain the federal 28 percent ceiling touched.
Some states apply sales tax at the purchase side on bullion under a specific dollar threshold. That does not affect the sale-side calculation, but sales tax paid at purchase is added to basis (as noted above). Combined federal-plus-state effective rate on a collectibles gain in a high-tax state can approach or exceed 40 percent, before the 3.8 percent net investment income tax if the household crosses the Section 1411 threshold.
How this compares to gold held inside an IRA
Inside a self-directed gold IRA, none of the mechanics above apply during the accumulation phase. There is no annual capital-gains event, no 1099-B on internal trades, no 28 percent character question. Gains stay deferred while the metal sits in the IRA custodian’s approved depository.
The tax comes at distribution. The account holder can take cash after the custodian sells the metal, or take an in-kind distribution as coins delivered to a home address. Either path is taxed as ordinary income at the taxpayer’s marginal rate that year. There is no 28 percent character issue, and no long-term capital-gains rate.
For a retiree whose distribution-year ordinary bracket sits below the 28 percent line, the IRA wrapper produces a lower effective rate on the same gold gain than a taxable-account sale would. For a retiree whose bracket sits at or above 28 percent, the IRA route is a wash or slightly worse on the character side, but wins on the timing side because the tax is deferred until the year of distribution.
A Roth gold IRA changes the arithmetic entirely. Qualified Roth distributions (past age 59.5 and past the five-year clock) are federally tax-free on both the contribution and the accumulated gain. Our gold IRA tax benefits overview covers the four wrapper choices side by side.
Moving existing taxable-account bullion into a gold IRA is not a like-kind swap. The IRS treats it as a sale (the collectibles gain hits at the taxable-account rate), followed by a cash contribution to the IRA within that year’s contribution limit. Our page on do I pay taxes on a gold IRA rollover unpacks the rollover mechanics when the source is a 401k, TSP, or other IRA rather than raw taxable-account bullion.
For households running both taxable-account bullion and an IRA-wrapped allocation at the same time, the question is where the exposure lives, not whether to hold gold. Our gold IRA versus taxable bullion brokerage allocation guide works through the balance-sheet split.
One quiet advantage of taxable-account bullion: the step-up at death
The 28 percent ceiling is a live-taxpayer problem. On the owner’s death, IRC Section 1014 resets the cost basis of most inherited assets to fair market value on the date of death. A bullion coin held to death passes to the heir at market value, and the pre-death collectibles gain is wiped out.
This is a genuine planning consideration for older households sitting on large embedded gains in taxable-account bullion. Holding to death preserves the step-up. Selling during life realizes the collectibles gain at up to 28 percent (plus NIIT and state tax). The trade-off between liquidity now and estate treatment later is a real decision, not a technicality.
Traditional IRA gold receives no step-up in basis on death: the inherited IRA is taxed as ordinary income to the heir as they take distributions under the SECURE Act ten-year rule. Roth IRA gold inherited by a non-spouse beneficiary continues to grow tax-free until the ten-year clock closes, then exits tax-free.
Frequently asked questions
Does the 28 percent rate apply if I only held the coin for six months?
No. Short-term gains (holding period one year or less) are taxed at the taxpayer’s ordinary income rate, regardless of whether the asset is a collectible, a stock, or a bond. The 28 percent collectibles rate is a long-term-only rule and applies only when the holding period exceeds one year.
My dealer did not send me a 1099-B. Do I still have to report the sale?
Yes. The dealer 1099-B rule is about what the dealer must file with the IRS. It does not change the seller’s own reporting obligation. The gain (or loss) is reportable on Schedule D and Form 8949 regardless of whether the dealer filed a 1099-B on the transaction.
What if I sold at a loss?
A loss on a bullion sale is a capital loss, deductible against capital gains and up to $3,000 per year against ordinary income (the general capital-loss limitation). Losses on collectibles do not get any special penalty treatment, just the same limitation that applies to stock losses.
Does the 3.8 percent net investment income tax apply on top of the 28 percent rate?
Yes, when the taxpayer’s modified adjusted gross income crosses the Section 1411 threshold (which varies by filing status). The 3.8 percent NIIT applies on the same net investment income base that includes the collectibles gain. A high-income filer can face an effective federal rate of 31.8 percent on a long-term bullion gain, before state tax.
Are gold jewelry, gold nuggets, or gold jewelry making the same rate?
Yes, insofar as they are metal collectibles under Section 408(m). Gold jewelry sold at a gain in a taxable account faces the same 28 percent long-term ceiling that a coin does. Gold jewelry that was gifted or inherited follows the same basis rules that apply to any capital asset (donor’s basis on a gift, stepped-up basis on inheritance).
Can I 1031-exchange one gold coin for a different one to defer the gain?
No. Since the 2017 tax law changes, Section 1031 like-kind exchanges have been limited to real estate. Personal property, including collectibles and precious metals, no longer qualifies. Any bullion-for-bullion swap is a taxable event on both legs.
Sources cited
- IRS Topic 409 (Capital gains and losses): the plain-language summary of the long-term rate schedule and the 28 percent collectibles rule.
- IRC Section 408 (Individual retirement accounts), including subsection (m) that defines “collectible” and captures precious metals.
- IRC Section 1 (Tax imposed), including subsection (h) that sets the 28 percent maximum rate on long-term collectibles gain.
- IRS Instructions for Schedule D (Form 1040), containing the 28 Percent Rate Gain Worksheet used to calculate the character adjustment.
- IRS Publication 550 (Investment Income and Expenses): general capital-asset basis rules that apply to bullion.
- IRS Form 1099-B (Proceeds from Broker and Barter Exchange Transactions): the dealer-side sale reporting form.
- IRS Form 8949 (Sales and Other Dispositions of Capital Assets): the taxpayer-side reporting form for the gain.
- 31 CFR 1010.330: the currency-transaction reporting rule that drives Form 8300.
- IRS Form 8300 (Report of Cash Payments Over $10,000): the reporting form filed by any business receiving over $10,000 in cash.
- IRC Section 1014 (Basis of property acquired from a decedent): the step-up-in-basis rule for inherited assets.
- IRC Section 1411 (Imposition of tax): the 3.8 percent net investment income tax that can stack on top of the collectibles rate.