Gold ETF Gains May Trigger Higher Tax Bills, Experts Warn

Investors reaping profits from gold’s recent rally may face an unexpected tax surprise, as popular gold exchange-traded funds (ETFs) are subject to a higher federal tax rate on long-term capital gains.

The Internal Revenue Service (IRS) treats gold and other precious metals as “collectibles,” a category that also includes art, antiques, and rare items. According to tax experts, this classification extends to ETFs physically backed by metals — such as SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and abrdn Physical Gold Shares ETF (SGOL).

Gold bars | Source: Pexels

Collectibles carry a top federal long-term capital gains tax rate of 28%, compared to a 20% maximum for assets like stocks and real estate. “The IRS treats such ETFs the same as an investment in the metal itself,” said Emily Doak, director of ETF and index fund research at the Schwab Center for Financial Research.

This rule applies to ETFs structured as trusts, the standard format for most physical gold funds. The news comes as gold prices have soared, with spot prices hitting a record high above $3,500 per ounce. Gold futures have surged approximately 23% in 2025 and 36% over the past year, driven by fears of a recession following new tariffs announced by President Donald Trump in April.

Gold bars | Source: Pexels

While traditional long-term capital gains tax rates range from 0% to 20% based on income, collectibles are taxed in alignment with marginal income-tax rates, capped at 28%. Short-term gains, for assets held one year or less, are taxed as ordinary income, from 10% to 37%.

In addition to federal taxes, investors may also owe a 3.8% net investment income tax and applicable state and local taxes.