The 28% Collectibles Rate
Why your silver is taxed like a painting — and what it costs you.
The Rule in One Paragraph
When you sell silver or gold bullion (or most precious-metals coins) that you held for more than one year at a profit, the gain is not taxed at the normal long-term capital gains rates of 0%, 15%, or 20%. It is taxed as a collectible, with a top rate of 28%. The rule lives in Section 1(h)(4) of the Internal Revenue Code, and the definition of "collectible" it points to — Section 408(m) — includes "any metal or gem," with very limited exceptions.
What That Means in Real Dollars
Take a stacker who bought $15,000 worth of silver, held it for years, and sold it for $25,000. The gain is $10,000. Here is the tax bill side by side:
| Same $10,000 long-term gain | Tax rate | Tax owed |
|---|---|---|
| Stocks or mutual funds (typical) | 15% | $1,500 |
| Stocks or mutual funds (top bracket) | 20% | $2,000 |
| Silver or gold bullion | 28% | $2,800 |
Same profit. Same patience. Up to $1,300 more in tax — simply because of what the asset is. And for higher-income stackers, the 3.8% net investment income tax can stack on top, pushing the effective rate above 31%.
How Did Bullion Get Labeled a Collectible?
The collectibles rate was written in an era when the category meant art, antiques, stamps, and rare coins — things people collect for hobby or beauty. Somewhere along the way, "any metal" got swept into the same basket as Persian rugs. Common sense says a 100-ounce bar of silver is not a collectible. It is money — a store of value older than the dollar itself. The label never fit, and stackers have been paying for the mislabel ever since.
The Common Misconception
Some dealers advertise that certain coins are "exempt" from the collectible rule. Be careful. There is a narrow exception in Section 408(m)(3) that matters for what an IRA may hold — but it does not change how your capital gain is taxed when you sell. For tax-rate purposes, bullion and most precious-metals coins remain collectibles. If a pitch sounds too good, ask a CPA before acting.
What You Can Do
- Know your numbers. Keep every receipt, every premium record, every mint sheet — cost basis is what protects you at filing time. See The Forms Shelf.
- Follow the fix. The KiDS Legacy Act would end the collectibles treatment for coins and bullion. See the KiDS Legacy Act page.
- Say something. Send the letter. Fairness does not happen in Washington by itself. Download the letter →
Quick Answers
Does the 28% rate apply to short-term sales too?
No. Held one year or less, your gain is ordinary income taxed at your regular bracket — the collectibles rate only applies to long-term holdings, where it replaces the friendlier 15%/20% long-term rates.
What about losses?
Losses on the sale of bullion are reported the same way as other capital losses — the collectibles label only penalizes the upside.
Does my state matter?
States without an income tax (like Texas) leave you with only the federal bill. States with income taxes may tax the gain too — check your state's treatment of collectibles.