While gold investment returns are at a notable high, those invested in gold exchange-traded funds (ETFs) may face an unexpectedly hefty tax responsibility on their gains.
The Internal Revenue Service classifies gold and other precious metals as “collectibles,” a category that encompasses various physical assets such as fine art, antiques, rare stamps, coins, fine wines, classic cars, and vintage comic books.
This classification extends to ETFs that are backed by physical gold, according to tax specialists.
The significance of this classification lies in the tax implications: collectibles are subject to a top federal tax rate of 28% on long-term capital gains, which applies to assets held for over one year. This rate starkly contrasts with the maximum 20% rate that generally applies to stocks and other assets, including real estate.
Those investing in well-known gold funds, such as SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and abrdn Physical Gold Shares ETF (SGOL) may be caught off guard to learn about the 28% tax rate applied to their long-term capital gains, as indicated by tax experts.
“The IRS regards these ETFs as equivalent to direct investments in the metal itself, categorizing them under collectibles,” stated Emily Doak, director of ETF and index fund research at the Schwab Center for Financial Research.
It’s worth noting that this elevated capital gains tax rate for collectibles specifically applies to ETFs set up as trusts.
Gold Prices Surge
Investors have seen remarkable gains in gold investments over the past year.
Recently, spot gold prices surged above $3,500 per ounce, climbing from $2,200 to $2,300 just a year ago. Gold futures have increased approximately 23% in 2025 alone, marking a 36% rise over the past year.
Concerns over a potential global trade war, spurred by tariffs imposed by President Donald Trump in early April, have led many investors to seek gold as a safe haven during these uncertain times.
Collectibles and Their Unique Tax Implications
Investors in traditional assets such as stocks and stock funds typically encounter one of three tax rates on their long-term capital gains: 0%, 15%, or a maximum of 20%, depending on their annual income.
In contrast, collectibles operate under different regulations.
Long-term capital gains associated with collectibles are tied to a seven-tiered system of marginal income tax rates, capped at 28%. These rates—10%, 12%, 22%, 24%, 32%, 35%, and 37%—mirror the rates applicable to wages earned by employees.
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For example, an investor within the 12% marginal income-tax bracket would pay a 12% tax rate on their profits from collectibles. Conversely, a taxpayer in the 37% bracket would see their rate capped at 28%.
Additionally, investors holding stocks or collectibles for shorter periods, generally one year or less, encounter a different tax rate known as short-term capital gains, taxed similarly to ordinary income, ranging from 10% to 37%.
It’s also important to acknowledge that taxpayers might owe a 3.8% net investment income tax, along with potential state and local taxes, in addition to federal tax obligations.
