Gold returns are shining — but investors holding gold exchange-traded funds may get hit with an unexpectedly high tax bill on their profits.

The Internal Revenue Service considers gold and other precious metals to be “collectibles,” similar to other physical property like art, antiques, stamps, coins, wine, cars and rare comic books.

That’s also true of ETFs that are physically backed by precious metals, according to tax experts.

Here’s why that matters: Collectibles generally carry a 28% top federal tax rate on long-term capital gains. (That rate applies to profits on assets held for longer than one year.)

By comparison, stocks and other assets like real estate are generally subject to a lower — 20% — maximum rate on long-term capital gains.

Investors in popular gold funds — including SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and abrdn Physical Gold Shares ETF (SGOL) — may be surprised to learn they face a 28% top tax rate on long-term capital gains, tax experts explain.

“The IRS treats such ETFs the same as an investment in the metal itself, which would be considered an investment in collectibles,” wrote Emily Doak, director of ETF and index fund research at the Schwab Center for Financial Research.

The collectibles capital-gains tax rate only applies to ETFs structured as trusts.

Spot gold prices hit an all-time high above $3,500 per ounce last week, up from roughly $2,200 to $2,300 a year ago. Gold futures prices are up about 23% in 2025 and 36% over the past year.

A barrage of tariffs announced by President Donald Trump in early April fueled concern that a global trade war will push the U.S. economy into recession. Investors typically see gold as a safe haven during times of fear.  

Their long-term capital-gains tax rates align with the seven marginal income-tax rates, capped at a 28% maximum. (These marginal rates — 10%, 12%, 22%, 24%, 32%, 35% and 37% — are the same ones employees pays on wages earned at work, for example.)

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Here’s an example: An investor whose annual income places them in the 12% marginal income-tax bracket would pay a 12% tax rate on their long-term collectibles profits. An investor in the 37% tax bracket would have theirs capped at 28%.

Meanwhile, investors who hold stocks or collectibles for one year or less pay a different tax rate on their profits, known as short-term capital-gains. They generally are taxed at the same rate as their ordinary income, anywhere from 10% to 37%.

Taxpayers might also owe a 3.8% net investment income tax or state and local taxes in additional to federal taxes.

As he exits his efforts to curtail wasteful government spending, Elon Musk took one last shot, calling into question the $2.5 billion Federal Reserve building renovation.

In a rare interview with print reporters, the initiator of the Department of Government Efficiency advisory board said the price tag for the central bank operation “sounds high.”

“I mean, what do you get for two and a half billion dollars in redecorating? Must be incredible,” the Tesla CEO said.

The Fed began the project in 2021 with an initial price tag of $1.9 billion. Since then, multiple factors have converged to drive up costs, including rising costs of materials, construction delays, changes in the design and site problems.

Among the goals for the renovation are dealing with a backlog of upgrades, meeting building codes and regulations, updating technology and addressing energy efficiency. Fed officials say the changes ultimately will save money by consolidating staff into one space, which will reduce leasing costs, “and provide a modern, efficient workspace for employees to conduct their work on behalf of the American people.”

Musk, though, said the cost overruns should be part of the broader examination over government waste. DOGE claims to have saved taxpayers $160 billion during its short operating life looking through the government’s books.

“Since, at the end of the day, this is all taxpayer money, I think … we should certainly look to see if indeed the Federal Reserve is spending two and a half billion dollars on their interior designer,” Musk said. “That’s an eyebrow raiser, you know? They’re like, can we see pictures of what you get for that?”

The Fed is not actually funded by taxpayers but rather by the interest the central banks earns on its securities as well as fees from banks it supervises. Members of the Fed Board of Governors are, however, paid through taxpayer money.

Normally, the money the Fed earns beyond its operating costs are paid back to the Treasury. However, the past two years the central bank has seen operating losses due to rising interest rates that it must pay on bank reserves.

As for the renovation, documents filed with the National Capital Planning Commission note that, “While there have been regular modifications and renovations to the building over its 80-year history, many of the building systems are at the end of their useful life, and the building no longer fully serves the Board’s needs.”

Fed officials did not immediately respond to a request for comment.