Sales Tax on Gold and Silver in California
Taxing gold and silver investments seems counterproductive. States generally don’t charge sales tax on investments such as stocks, bonds, ETFs and currencies but do impose sales taxes on precious metal investments such as gold and silver bullion bars and coins.
Bureaucrats in California attempted, through petty politics, to raise the purchase threshold for sales tax exemption from $1,500 to $2,000 by exploiting inflation-adjustment mechanisms built into state regulations.
Buying Gold & Silver in California
Purchase of precious metals can be an intricate process with many factors to take into account. The initial step should be finding a trustworthy dealer with a range of products and competitive pricing; you should also prioritize secure payment methods and reliable delivery as part of this search process.
California has a complex tax structure for gold and silver purchases. There are exemptions and rates that differ for investments, transactions over certain amounts, or purchases exceeding specific purity thresholds.
Tennessee is currently considering legislation requiring government pension funds to hold 40% of their reserves in physical gold and silver reserves, a timely measure as people become aware that paper money has diminished in value and precious metals serve as safety nets in times of financial turmoil. Other states should follow Tennessee’s lead and break free of bureaucratic constraints – currently Tennessee leads in this respect.
Investment in precious metals presents the unique prospect of avoiding sales tax, with profits from bullion sales taxed only after at least a year’s ownership; this is significantly lower than most capital gains taxes such as those found on stocks or mutual funds.
State law in California mandates that the Board of Equalization calculate the annual taxable amount based on inflation; this year, they plan to raise it from $1,500 to $2,000.
Last year, Money Metals Exchange and Sound Money Defense League played an instrumental role in passing laws in Ohio and Arkansas to eliminate discriminatory sales tax laws on precious metal purchases, but the battle remains in other states which still hold on to such unfavorable revenue statutes. Recently however, Mississippi bureaucrats terminated their practice of taxing purchasers of gold and silver — marking yet another victory for those who believe in sound money.
Precious metals are widely considered safe haven investments that offer stable returns over the long haul, making them attractive savings vehicles. Unfortunately, most states still tax precious metals like any consumer good when in reality these investments can be physically purchased and sold.
Thankfully, some states are finally acknowledging the absurdity of such practices and are taking steps to end them. Mississippi recently joined them by lifting an antiquated sales tax on precious metal purchases for several decades.
Even in states without state sales taxes on bullion, local use taxes may still apply to collectible coins and processed items; be sure to contact your city tax authorities for more details if any charges may apply in your jurisdiction. Wisconsin and New Jersey state legislators recently introduced bills aimed at lifting sales taxes on precious metals; nationwide awareness is building.
Many consumers invest in Gold and Silver slowly over time as part of a long-term savings strategy, without being subject to tax liabilities on these purchases. They don’t want their prudent investment decisions punished with additional taxes due to being treated like any other asset purchased from an institutional provider.
Customers looking to avoid paying unnecessary sales tax should seek out reliable dealers with excellent customer support, transparent return policies, and online payment solutions such as PayPal that offer additional protection from fraudsters.
California Gold & Silver dealers that stand out are those that provide safe, insured storage facilities when needed and help clients to invest their precious metals in tax-advantaged retirement accounts to maximize returns while minimizing fees, commissions and sales taxes – something more and more states are doing by passing precious metal sales tax exemption laws.
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