Sales Tax on Gold and Silver in California
Navigating tax laws surrounding bullion investments can be complex and time consuming, but there are ways to minimize your risk of additional taxes being added onto your purchase.
Gold and silver are constitutional money, so it does not make sense for states to tax them. Thankfully, some states are taking steps to reduce sales taxes on precious metals.
Taxes on Bullion
Many investors use precious metals as diversifying investments, as a safe haven that’s immune from market fluctuations. Implementing sales tax on bullion penalizes these buyers who act responsibly by purchasing such assets.
State governments should support savings behaviors rather than punish them, which explains why states like Mississippi have taken steps to modify their restrictive sales tax laws, with hopes California will follow suit soon.
Unfortunately, California sales taxes still apply to non-monetized bullion products and numismatic coins sold below $2,000 exemption threshold. But that doesn’t have to be an inconvenience! Hero Bullion automatically calculates your owed sales tax at checkout, taking it out as necessary – read more here about our efficient process!
Taxes on Coins
California state sales tax does not apply to bullion coins, bars or rounds sold in a transaction valued at more than $1500; however, accessories like tubes and holders as well as processed coins may be subject to sales tax.
Bulk sales exemption thresholds for bullion, nonmonetized gold or silver bullion or numismatic coins are adjusted annually to account for inflation rates; most recently this was increased on January 1, 2023 from $1,500 to $2,000.
Imposing taxes on precious metals might seem like an effective way of filling state coffers, but evidence shows otherwise. Instead of increasing state revenue through this route, these types of taxes actually have the opposite result and discourage trading and economic activity in this sector – including at brokering businesses, conventions and storage facilities. Furthermore, any profits realized after one year of holding are considered capital gains taxed at individual marginal rates which may be higher than for stocks or bonds.
Taxes on Accessories
Prior to June 2018, sales tax nexus was limited to physical presence: businesses were only required to collect and remit sales tax in states in which they employed employees or maintained retail stores. That changed when the Supreme Court overruled this rule with South Dakota v. Wayfair, permitting states to tax businesses based on virtual or economic connections within that state.
California taxes the majority of tangible products, though there may be exemptions. In addition to the state sales tax and district taxes that may apply when making purchases.
Sellers are typically responsible for collecting sales tax from buyers; however, retailers and marketplace sellers who meet a state’s economic nexus threshold must collect district (local) taxes as well. Buyers can self-report use tax when purchasing goods or services from vendors located outside their own state that are stored or consumed within its borders.
Taxes on Processed Items
California law mandates use taxes for products sold and shipped into its borders, such as monetized bullion (excluding copper, platinum or palladium) non-monetized gold and silver coins rare coins and accessories. Furthermore, certain areas in California also impose regional sales taxes which vary depending on where you reside.
Many investors consider precious metals an ideal long-term investment, protecting against the ongoing devaluation of America’s paper money by the Federal Reserve. Unfortunately, government bureaucrats consider such gains income subject to capital gains taxes.
Some states are taking steps to repeal anti-gold and silver laws. Texas recently enacted legislation creating a state bullion depository; other states should likely follow suit and create their own. Although such legislative victories represent progress towards liberating gold and silver from bureaucratic restrictions, more work needs to be done in this arena.
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