Gold ETF tax: how GLD, IAU, SLV and other metal funds are taxed

Why a gold ETF is taxed like a gold bar

A physically backed gold fund does not own gold the way a mutual fund owns stock. GLD, IAU, SLV and similar funds are organized as trusts that hold metal in a vault and do nothing else, which makes them fixed investment trusts taxed as grantor trusts (Treas. Reg. 301.7701-4(c); IRC 671 to 679). The trust itself pays no income tax, and each shareholder is treated as owning a slice of the bars. The GLD annual report filed in November 2025 says it plainly: shareholders are treated "as if they directly owned a pro rata share" of the trust's gold.

That look-through is why the collectibles rate follows you. IRC 1(h)(5)(A) defines collectibles gain by reference to IRC 408(m), which lists "any metal or gem," and IRC 1(h)(5)(B) adds that gain on selling an interest in a trust is collectibles gain to the extent it comes from appreciation in collectibles the trust holds. Long-term gain on GLD shares is therefore 28-percent rate gain: taxed at your ordinary rates, but never above 28% (IRC 1(h)(4), 2026). Most stocks and stock funds top out at 20% (Rev. Proc. 2025-32 thresholds, 2026); the broader rules are on the collectibles capital gains tax page.

Run our base case. A California couple earning $200,000 sells GLD for a $500,000 long-term gain in 2026. The engine puts the tax at $193,298: $129,698 federal, $17,100 of net investment income tax (3.8% under IRC 1411 above $250,000 of joint income) and $46,500 to California, which taxes every gain as ordinary income (see California capital gains tax). Put the same $500,000 into a fund of gold mining stocks and the tax is $141,305. The wrapper, not the price of gold, accounts for $51,993 of difference.

Five kinds of gold fund, five tax results

Ticker symbols look alike, but the legal structure underneath decides the tax. Read the fund's prospectus or annual report under "U.S. federal income tax consequences" before you buy, because that section tells you which bucket you are in.

The futures row deserves a warning: a commodity pool organized as a partnership reports each year's marked-to-market result on a K-1 whether or not you sold, and its 10-K risk factors warn that your tax bill can exceed any cash you receive. The PFIC row cuts the other way. One Canadian physical gold trust's October 2025 prospectus supplement says an electing holder who sells units held over a year recognizes long-term capital gain taxed at "preferential rates," while the trust's own gains on metal pass through at up to 28%. That outcome depends on making the QEF election (IRC 1295) on time and on the fund keeping its PFIC status, so treat it as a fund-specific disclosure, not a general rule.

The gold sale you never see: sponsor fees

Physically backed trusts pay their sponsor by selling a little gold. GLD's sponsor fee accrues at an annual rate of 0.40% of net asset value, and IAU's at 0.25% (fund 10-K filings, 2025). Each of those sales is treated as your own sale of a sliver of metal. The GLD 10-K describes the math: you recognize gain or loss equal to your share of the sale proceeds minus your basis in the gold sold, and the basis of your remaining gold drops by the same fraction. In GLD's fiscal year ended September 30, 2025, the trust booked a $51,161 realized gain from selling gold to pay expenses, spread across every holder.

Two consequences follow. First, a long-held position produces small taxable gains every year even if you never sell a share; the trust's grantor statement gives the figures your preparer needs. Second, the fee itself is an investment expense that individuals cannot deduct. The GLD 10-K said miscellaneous itemized deductions would return with a 2% floor for 2026, but the One Big Beautiful Bill Act changed that: IRC 67(h), as amended by P.L. 119-21 section 70110, disallows miscellaneous itemized deductions for every taxable year beginning after 2017 with no end date. So for 2026 you pay tax on the gold sold to cover the fee and get no deduction for the fee.

Lots, basis and loss harvesting: the open questions

Buying GLD in several lots raises a question the Code does not answer. The GLD 10-K warns that it is "uncertain" whether shareholders may use the specific identification rules of Treas. Reg. 1.1012-1(c) when they sell some shares, and that the IRS "could take the position" that you hold a blended basis and holding period in the underlying gold. There is, in the filing's words, "no Code section, Regulation or other guidance on this point." If you plan to sell part of a position, keep lot records and ask your CPA which method to use before you place the order.

Wash sales are the second gray area. IRC 1091 disallows a loss on "shares of stock or securities" when you buy substantially identical stock or securities within 30 days before or after the sale. A grantor trust share is treated for tax as ownership of metal, and metal is neither stock nor a security, which is why many practitioners conclude the wash sale rule does not reach physically backed metal trusts. We found no IRS ruling, regulation or court case that settles it, so treat a quick sell-and-rebuy as an unresolved position, not a safe one. Read the rules on tax-loss harvesting before you try it.

Losses net in a set order. A collectibles loss first reduces 28-percent rate gain, and only the remainder offsets your other long-term gains (IRC 1(h)(4)(B), 2026). Swapping a losing gold trust for a different metal fund can still be useful when it cancels gain in the 28% bucket, which is the most expensive long-term bucket you can have.

When the 28% cap does not bite

The 28% figure is a ceiling, not a flat rate. Collectibles gain stacks on top of your other income and is taxed at your ordinary bracket rates until it reaches 28%. For a single filer the 22% bracket runs to $105,700 of taxable income (Rev. Proc. 2025-32, 2026), so a moderate earner may never see 28% at all. What a low-bracket seller loses instead is the 0% band for ordinary long-term gains: stock gains can sit at 0% up to $49,450 of taxable income for single filers (Rev. Proc. 2025-32, 2026), but collectibles gain gets no 0% band.

Our single Texas retiree with $60,000 of other income shows the effect. A $40,000 GLD gain costs $8,150 (20.4% of the gain), while the same gain in a stock fund costs $5,168 because part of it lands in the 0% band. Low-income years are still the best years to sell gold trust shares, just not as good as they are for stock. Our 0% capital gains harvesting page explains the band for stock.

Gold ETFs inside an IRA

An IRA that buys a collectible is treated as making you a taxable distribution of the cost (IRC 408(m)(1)), so a fund that is really a pile of bullion raises an obvious question. Both GLD's and IAU's sponsors say in their annual reports that they obtained IRS private letter rulings holding that an IRA's purchase of their shares is not the acquisition of a collectible and is not a distribution. A private letter ruling binds the IRS only for the taxpayer that asked, but it is the reason brokers allow these funds in retirement accounts. The filings add a caveat: if the IRA redeems shares for physical gold and hands the metal to you, that can be a taxable distribution.

Inside a traditional IRA the 28% question disappears and a different rule takes over: withdrawals are ordinary income regardless of what the account held. Inside a Roth IRA, qualified distributions are excluded from income (IRC 408A(d)(1)). The full rules for holding metal in a retirement account, including which coins and bars qualify and who must hold them, are on the gold IRA tax rules page; a Roth conversion can also move a metal fund into the Roth wrapper.

Planning a large gold ETF sale

Big positions built during a long gold rally carry gains that are costly to unwind. The levers are limited but real.

• Split the sale across tax years. Selling half in December and half in January can keep more of the gain under the 28% cap and the 3.8% NIIT threshold in each year (IRC 1411, thresholds not indexed, 2026). See year-end timing.
• Harvest offsetting losses elsewhere, remembering that collectibles losses net first against the 28% bucket (IRC 1(h)(4), 2026).
• Hold for the step-up. Heirs take a basis equal to value at death under IRC 1014, which erases the built-in gain; see step-up at death.
• Move before selling if a change of state is already in your plans: gain on exchange-traded shares is generally taxed by your state of residence when you sell (see moving states before a sale).
• Compare with physical metal. Coins and bars are taxed the same way, with dealer spreads and storage instead of a sponsor fee; see capital gains tax on gold and capital gains tax on silver.

Exchange-traded shares sell for cash in seconds, so an installment note is not a practical tool here the way it is for a business or a private collection. The real decisions are timing, which bucket each loss offsets, and whether the shares belong in a taxable account at all. Get the Big Sale Tax Analysis.

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