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Gold returns are shining, but investors with gold exchange funds could face unexpectedly high tax bills on their profits.
Internal revenue services consider gold and other precious metals to be “collectibles,” similar to other physical assets such as art, antiques, stamps, coins, wine, cars, and rare cartoons.
According to tax experts, this applies to ETFs that are physically backed by precious metals.
Here’s why it’s important: Collectibles generally have a federal tax rate of 28% on long-term capital gains. (That rate applies to the profits of assets held for more than one year.)
In comparison, other assets, such as stocks and real estate, are generally subject to a lower maximum rate of long-term capital gains (20%).
Investors in popular gold funds, including SPDR Gold Shares (GLD), Ishares Gold Trust (IAU), and Abrdn Physical Gold Shares ETF (SGOL), may be surprised to learn that they face a top tax rate of 28% on long-term capital gains.
“The IRS treats such ETFs in the same way as investments in the metals themselves. This is considered an investment in collectibles,” wrote Emily Doak, director of ETFs and index fund research at Schwab Center for Financial Research.
Collectibles Capital-Gains tax rates apply only to ETFs configured as trusts.
Gold prices are rising
Investors have been making huge profits from gold over the past year.
Spot Gold prices reached $2,300 last week, up from about $2,200 a year ago, exceeding $3,500 per ounce. Gold futures prices have risen about 23% in 2025 and 36% over the past year.
The tariff barrage announced by President Donald Trump in early April has fueled concerns that the world trade war would drive the US economy into a recession. Investors usually view money as a safe haven in times of fear.
Long-term capital gains vary for collectibles
Investors who own stocks, equity capital and other traditional financial assets typically pay one of three tax rates on long-term capital gains (maximum tax rates of 0%, 15%, or 20%). Fees depend on your annual income.
However, collectibles are different from stocks.
Their long-term capital return tax rate is consistent with seven marginal income tax rates, which are at the upper limit of up to 28%. (These marginal rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) are the same as, for example, paying employees with wages they earn at work.)
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An example is: Investors who place them in a marginal income tax bracket with an annual income of 12% will pay a 12% tax rate on long-term collectible profits. Investors with a 37% tax limit closes at 28%.
Meanwhile, investors who own stocks or collectibles within a year will pay different tax rates on profits known as short-term capital intake. Usually they are taxed at the same tax rate as regular income, ranging from 10% to 37%.
Taxpayers may also owe a net investment income tax of 3.8% or state and local taxes with an additional federal tax.
