Gold ETF investors could face a costly tax surprise in the face of the asset’s blistering performance. Contrast this with gold futures prices, which are up around 23% so far in 2025 and 36% from a year ago. Consequently, most ETF holders may be unaware that their long-term capital gains could be taxed at a maximum federal rate of 28%. This elevated tax rate only applies to collectibles, a narrow category that includes gold.
As a result, spot gold prices skyrocketed last week, reaching an unprecedented high of more than $3,500 per ounce. This impressive jump from roughly $2,200 to upwards of $2,300 just last year underscores the metal’s increasing worth. The increasing price of gold has lured away a lot of investors’ interest. They’re rushing into the biggest ETFs such as SPDR Gold Shares (GLD), iShares Gold Trust (IAU), abrdn Physical Gold Shares ETF (SGOL), and a few others. Imagine the surprise when long-term investors discover the tax implications of investing in these funds.
Additionally, the Internal Revenue Service (IRS) treats gold ETFs as investments in collectibles. As a result, the IRS treats these ETFs as though they were direct investments in the metal, according to Emily Doak, director of ETF and index fund research at the Schwab Center for Financial Research. This suggests they’re treated as investments in collectibles. This classification would subject long-term capital gains from such investments to a highest tax rate of 28%. In contrast, traditional financial assets such as stocks typically benefit from lower rates.
For investors in the 37% income tax bracket, their long-term capital gains tax is limited to 28%. In addition they could be hit by the 3.8% net investment income tax. In addition, they would be liable for any state and local taxes that may apply. Your short-term capital gains tax will apply if you sell your gold investments within one year of purchase. These rates are between 10% and 37%.
The long-term capital gains tax rates for gold investors differ from 10% to 28%. Those who invest in stocks or stock funds generally pay one of three lower tax rates on their long-term capital gains: 0%, 15%, or a maximum rate of 20%. This important distinction may inform investment strategies for anyone interested in benefitting from gold’s outperformance.
Gold keeps breaking records day in and day out. Not only do investors need to be on the lookout for tax changes directly affecting their holdings. What many people may not know is that gold is considered a collectible. This classification imposes a greater tax burden on them.
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