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Investors in gold ETFs may face unexpectedly high tax bills on profits due to the IRS classifying gold as a "collectible" and subjecting it to a 28% top federal tax rate on long-term capital gains.
ByAinvest
Thursday, May 1, 2025 10:28 am ET1min read
Gold ETF investors may face a 28% top federal tax rate on long-term capital gains due to the IRS treating ETFs as collectibles, similar to physical property like art or coins. This is different from stocks and other assets, which generally carry a 20% maximum rate on long-term capital gains. Investors in popular gold funds such as SPDR Gold Shares, iShares Gold Trust, and abrdn Physical Gold Shares ETF may be surprised by this tax rate.
Gold ETF investors may face a 28% top federal tax rate on long-term capital gains due to the IRS treating ETFs as collectibles, similar to physical property like art or coins. This is different from stocks and other assets, which generally carry a 20% maximum rate on long-term capital gains. Investors in popular gold funds such as SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and abrdn Physical Gold Shares ETF may be surprised by this tax rate.The IRS classifies gold ETFs as collectibles, which are subject to a higher capital gains tax rate. This classification can significantly impact the overall return on investment for gold ETF holders. For instance, if an investor holds a gold ETF for more than a year and sells it at a profit, the gain is subject to a 28% tax rate. In contrast, the long-term capital gains tax rate for stocks and other assets is generally 20%.
Investors should be aware of this tax treatment when considering gold ETFs as part of their investment strategy. The higher tax rate may affect the net return on investment, particularly for those who hold gold ETFs for extended periods. Understanding this tax implication is crucial for making informed investment decisions.
References:
[1] https://www.bankrate.com/investing/best-gold-etfs/
[2] https://www.marketscreener.com/quote/index/S-P-GSCI-ZINC-INDEX-46869188/news/Indian-miner-Vedanta-s-quarterly-profit-doubles-on-lower-tax-rate-higher-commodity-prices-49770691/
[3] https://www.britannica.com/money/gold-ira-investing
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