Sales Tax on Gold and Silver in California
Some states recognize the special savings-friendly qualities of physical gold and silver purchases by exempting them from state sales taxes. Although other states impose taxes, Sound Money Defense League is actively lobbying legislation in these states to abolish them.
Just last week, Mississippi bureaucrats finally stopped imposing this unfair and outdated tax on residents. Here’s everything you need to know.
In the US, where you reside is key in determining whether a sales tax applies when purchasing precious metals. Cities and counties may levy additional levies; it’s therefore wise to check local laws prior to making your purchase decision.
Though imposing a sales tax on gold and silver may appear like an easy way to raise revenue, in reality it actually discourages investment in these precious metals and harms coin conventions, metal brokers, and other businesses that rely on selling bullion investments. Furthermore, this sales tax also drives investment activity away from nearby states which don’t impose one and promotes migration of coin conventions, metal brokers, coin conventions, conventions etc. across borders.
Due to their Constitutional definition as money, precious metals should not be taxed in such a manner; stocks and bonds don’t incur sales taxes in this way; it is therefore critical that legislation to abolish sales taxes on sound money be supported.
Other than California’s bulk sales tax exemption (which is automatically adjusted each year to account for inflation), precious metals in California don’t currently enjoy any specific exemptions or tax breaks. This may change, however, with states such as Utah and Oklahoma leading the charge in rolling back bureaucratic taxes by recognising gold and silver coins as legal tender.
Gold and silver purchases tend to be purchased for long-term savings purposes, protecting against unexpected expenditures. Taxing this form of investment penalises those who choose an asset with minimal market fluctuations for savings purposes; encouraging them instead to choose riskier financial instruments instead.
As state lawmakers become aware, laws eliminating capital gains taxes on precious metals are quickly becoming the norm. Texas is currently leading this effort by creating a state bullion depository; such an establishment would help free us from central bank control while offering profound financial and political benefits to states that adopt it.
Online Sales Tax
Physical gold and silver investments are typically exempt from sales tax in most states; however, exemption thresholds differ between states and have recently increased in California to at least $1500 or higher – meaning investors should exercise caution when buying large quantities online.
In general, investors selling precious metals at a higher price than they paid will owe capital gains tax, which must be calculated and reported annually like other taxable income.
Local and district sales taxes should be taken into account when investing online, making local/district taxes one of the primary concerns of investors. Bullion Exchanges suggests consulting a CPA or tax specialist for further advice regarding how these taxes impact you individually.
If you own precious metals and sell them at a higher price than initially purchased, capital gains tax may apply to your sale. Calculation of capital gains tax involves subtracting cost basis from sales price multiplied by your ordinary income tax rate.
Understanding the tax repercussions associated with purchasing gold and silver will have an effect on your investment strategy, so be sure to speak with a tax specialist or certified public accountant to ensure compliance with state and federal regulations.
At our firm, we believe it makes more sense for states to eliminate sales taxes on precious metals rather than impose them. After all, they are money according to the U.S. Constitution; therefore they should not be taxed like stocks, bonds, ETFs and mutual funds. Mississippi recently passed its bullion sales tax exemption law as an example of such legislation.