What investors need to know
Gold traded below $4,000 an ounce again on Tuesday as the dollar remained resilient at three-month highs, the prospect of another U.S. interest rate cut in December faded and easing U.S.-China trade tensions dulled bullion demand.
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Gold profits dazzling in 2025; But cashing out could trigger a bigger tax bill than you think.
Price gold futures It hit $4,000 per ounce for the first time in October. While the price of the precious metal fell on Friday as part of a broader decline in the market, year-to-date returns are still around 50%, hovering around $4,100.
Exchange-traded funds backed by physical gold (such as SPDR Gold Shares)GLD), iShares Gold Trust (IAU) and abrdn Physical Gold Stock ETF (SGOL) — increased by a similar amount.
By comparison, the S&P 500 U.S. stock index was up about 15% in 2025 as of Friday’s close.
The stunning returns in 2025 follow a year in which gold posted its best annual performance since 2010, rising nearly 26%. based on To the World Gold Council.
However, according to tax experts, investment profits from physical gold and funds that track gold are taxed differently than traditional assets such as stocks and bonds.
As a result, investors, especially those in the top tax brackets, may pay a higher federal tax rate on their gains in gold compared to assets such as stocks and bonds.
This could leave gold investors facing a surprise tax bill.
“I’ve seen a lot of missteps, especially in gold’s run this year,” said Tommy Lucas, certified financial planner and registered representative for Moisand Fitzgerald Tamayo, ranked No. 69 on CNBC’s 2025 Financial Advisor 100 list.
Not all gold ETFs are taxed the same
“Long-term” tax rates on investment profits – known as capital gains – preferential, for example, to the marginal income tax rates investors may pay on wages and other income.
For example, the top federal rate on long-term capital gains of 20% is lower than the top marginal income tax rate of 37%.
Long-term capital gains rates apply if the investor owns an asset for more than one year.
However, physical gold and funds backed by physical gold are considered collectibles for tax purposes, and collectibles have a top rate of 28% for long-term capital gains.
“There’s no escape from this [collectibles rate] Just because it is held in an ETF wrapper,” Lucas said.
This also applies to other precious metals such as silver.
St. Jeffrey Levine, a St. Louis-based certified public accountant and certified financial planner, said funds that hold gold futures contracts instead of physical gold have a different tax structure, with a top federal tax rate of 26.8 percent.
“Just because you have a gold ETF doesn’t mean it’s going to be taxed exactly the same,” said Levine, chief planning officer at Focus Partners Wealth.
He said that in both cases (callable and futures) investors in the top tax bracket would pay a higher rate on long-term profits than on a traditional asset such as a stock.
Of course, this tax discussion only applies to gold held in a taxable brokerage account and sold for a profit. It does not apply to investors holding gold ETFs in a tax-preferred retirement account such as an IRA.
Breakdown of tax on collections and futures transactions
There are three long-term capital gains rates depending on the investor’s annual income: 0%, 15%, and 20%.
Short-term capital gains applied to assets held for one year or less are different. Profit from such sales is taxed at ordinary income tax rates, such as those applied to wages. Yes Seven marginal tax rates ranging from 10% to 37%.
Collections are taxed like short-term capital gains but are capped at 28%. This means that an investor in the 32%, 35% or 37% income tax bracket cannot have more than 28% of long-term capital gains from collectible profits.
I have witnessed many wrong steps, especially in the rise of gold this year.
Tommy Lucas
Certified financial planner and registered representative at Moisand Fitzgerald Tamayo
Capital gains from futures contracts, meanwhile, are assessed under a 60/40 tax structure, Levine said. That means 60% of their profits are taxed as long-term capital gains, and the remaining 40% are taxed as short-term capital gains.
In the case of gold futures funds, here’s how the math works for someone in the top tax bracket: 60% of the 20% top long-term rate for capital gains is 12%; and 40% of the top marginal income tax rate of 37% is 14.8%.
All put together, Levine said, the top capital gains rate for gold futures contracts is 26.8 percent.
While some high-income investors think buying a gold futures fund is a better idea from a tax perspective, there are downsides, he said.
For example, such investors will receive a K-1 tax form because the funds are often structured as partnerships, Levine said. That could make filing an annual tax return more challenging and costly, he said.
