If you've read the Short-term vs. long-term gains explained article, you've already seen the 28% rate get a passing mention.
This article is the place to go a little deeper — what the rate is, why physical bullion lands in the bucket that triggers it, and why the Annual Report tells you which gains are long-term but stops short of computing what you actually owe.
This isn't a tax advice article. It's a help article about a number you might see referenced when reading about precious metals and taxes, and about how that number relates to what's on your Annual Report.
Tier access
The Annual Report is Premium-only, but the tax treatment described here applies to anyone selling physical bullion in the US, regardless of which app you use to track it.
The rule, in plain terms
Under US federal tax law, gains on the sale of collectibles held for one year or more are taxed at a federal rate capped at 28% — rather than the lower 15% / 20% rates that apply to long-term gains on most stocks, bonds, and similar assets.
A few things flow from that one sentence.
It's a cap, not a flat rate: If your ordinary marginal rate is lower than 28%, you generally pay your marginal rate. If it's higher than 28%, the cap is what applies. The collectibles rate is the lesser of 28% or your ordinary rate.
It only applies to long-term gains: Short-term gains (held under a year) are taxed as ordinary income at your full marginal rate, with no 28% cap. So a short-term gain at a 35% marginal rate is taxed at 35%, not 28%.
State taxes are separate: This is a federal rule. Whatever your state does on top — and many states tax capital gains as ordinary income — is layered on after.
The Net Investment Income Tax may apply: Higher-income filers may also owe a 3.8% NIIT on top of the collectibles rate. That's a separate calculation your tax advisor handles.
Why physical bullion is "collectibles"
The collectibles category in US tax law covers art, antiques, gems, stamps, certain coins, and physical precious metals. The IRS defines it broadly enough that physical gold, silver, platinum, and palladium — coins, bars, rounds, junk silver — all sit inside it.
That's why the 28% rate matters to anyone selling physical bullion at a long-term gain, but doesn't matter to someone selling shares of a precious metals mining stock, or shares of a gold ETF that holds futures contracts rather than physical metal. The asset matters more than the underlying metal.
Some bullion-backed ETFs (the ones that hold actual physical metal in trust) are also treated as collectibles for tax purposes — but that's a question for the fund's tax documents and your advisor, not something Gold Silver Ledger surfaces.
An illustrative example
Suppose you sold a 1 oz American Gold Buffalo for $4,850 that you originally bought at a $3,800 cost basis, eighteen months earlier. That's a long-term gain of $1,050 — which lands on the Long-Term G/L card of the Annual Report.
How that $1,050 is taxed depends on your overall tax picture, but the general shape:
If your marginal ordinary rate is 22%: The 28% cap doesn't bind — you'd generally owe federal tax on the gain at your 22% rate.
If your marginal ordinary rate is 32%: The 28% cap does bind — you'd generally owe federal tax on the gain at the 28% collectibles rate.
Either way: State taxes, NIIT (if applicable), offsets from any losses, and your full filing situation all come on top.
The example uses round numbers to keep the mechanics legible — it isn't a calculation for any specific filer. The arithmetic for your actual return belongs to you and a tax advisor.
What the Annual Report tells you, and what it doesn't
The Annual Report draws a clean line between the two pieces of information it's confident about and the piece it isn't.
Confident, and shown: Which sales were long-term and which were short-term. What the gain or loss was on each item. The totals split into the two buckets on the Short-Term G/L and Long-Term G/L cards.
Not shown: A computed tax owed.
The reason the report stops where it does is that the gap between gain and tax owed is filled by information the app doesn't have and isn't in a position to ask for: your marginal income tax bracket, your filing status, your state of residence, your other capital gains and losses, any losses you're carrying forward from prior years, your charitable giving, your NIIT exposure, and on and on.
A precise tax number that ignores any of those would be worse than no number — it'd be a confident, specific answer that a meaningful subset of users would file by mistake.
So the report surfaces the inputs your tax advisor needs (the per-item rows, the term split, the totals) and leaves the computation to them.
Where to go next
Short-term vs. long-term gains explained: The other half of why the rate split matters.
How cost basis is determined: Where each row's Cost Basis figure comes from.
Generating your Annual Report: Walkthrough of the page itself.
Why you should still consult a tax advisor: The disclaimer, unpacked.
Annual Reports for non-US users: Where UK and Canada support stand.