States Continue to Improperly Tax Gold Bullion

Gold is money.

This is true economically under the various conceptions of what exactly money is. It is the most marketable asset; it is the most liquid good; it is a medium of exchange and unit of account that is portable, durable, divisible, fungible, and a store of value.

It is also true legally in the United States. The US dollar was originally defined by weights of gold and silver. Article 1, Section 10 of the US Constitution provides that no state shall “make any Thing but gold and silver Coin a Tender in Payment of Debts.” The US Mint’s gold and silver coins remain legal tender, long after the later addition of Federal Reserve notes.

A sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.  is an important tool for state and local governments to efficiently generate revenues, but that efficiency hinges on properly designing the tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates.. Principled sales taxes should be imposed on all final consumption, but intermediate transactions should be exempt to avoid turning an efficient consumption taxA consumption tax is typically levied on the purchase of goods or services and is paid directly or indirectly by the consumer in the form of retail sales taxes, excise taxes, tariffs, value-added taxes (VAT), or income taxes where all savings are tax-deductible. into a burdensome taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on production and investment.

Money should not be subject to sales tax. Money, whether US dollars, gold, silver, or some other commodity or currency, is a good that gets exchanged. There is no final consumption of money—gold, silver, or otherwise. The sale of gold or silver bullion is not consumption that should be taxed; it is an intermediate transaction that should be exempt to preserve incentives to save and invest.

Sales of gold and silver bullion are essentially exchanging one denomination of money for another. Levying a sales tax on such a transaction would be just as inappropriate as levying a sales tax on breaking a $100 bill into five $20 bills.

Despite this, 13 states and the District of Columbia fail to properly exempt gold and silver bullion from their sales taxes. Of those, five states and the District of Columbia fully subject bullion to their sales taxes.

 

Recent Tumult in State Taxes on Bullion

Bullion taxes have been contentious recently.

For instance, the Kentucky legislature passed HB 8 in 2024, properly exempting bullion from sales taxes. Governor Beshear (R) line-item vetoed that portion of the bill, which the governor is empowered to do only for appropriation bills. The Attorney General stepped in to declare the veto void, and the legislature passed an additional bill reaffirming the exemption, as well as requiring refunds for taxes the governor insisted on illegally collecting.

In addition to other misguided proposals, New York City Mayor Zohran Mamdani (D) asked the legislature in Albany to abolish the partial exemption of bullion transactions from the state and local sales tax.

The Virginia legislature extended the state’s exemption again until July 1, 2028, in the 2026 budget bill. Alabama’s exemption is also temporary in statute, set to expire June 1, 2028.

There has also been a push across several states this year to establish complex, government-run “transactional gold” systems that overregulate the industry in favor of particular vendors that would be granted public-private partnerships. These bills, modeled by the American Legislative Exchange Council, include provisions that would exempt bullion transactions from sales taxes but also include overly burdensome regulations and cartelization of the bullion industry. About a dozen states have already considered and rejected these transactional gold bills, though one passed in Florida in June 2026.

Some states are making progress reforming their tax treatment of bullion, and some states are going backwards.

Florida recently extended the existing exemption to cover all bullion transactions, Connecticut provided for the existing minimum transaction for exemption to sunset on July 1, 2027, and New Jersey enacted an exemption for some bullion transactions.

Alaska does not have a state sales tax, but it established an exemption for gold and silver from local sales taxes that goes into effect August 28, 2026.

Maryland further limited its existing exemption, which only applies to transactions of at least $1,000, to apply only to transactions that occur at the Baltimore Convention Center after July 2025. After significant impact to in-state businesses (not located within the Baltimore Convention Center), the state quickly reversed this limitation after July 2026. This reform removed the geographic limitation but maintained the minimum transaction for exemption.

Washington abolished its sales tax exemption for bullion effective January 1, 2026, in what the bill erroneously labeled as “eliminating obsolete tax preferences.”

Principles, Not Preferences

Sales tax exemptions for bullion transactions are neither obsolete nor preferential.

Americans look to precious metals as vehicles for their savings and investment. This form of money is likely to remain attractive as long as the fiat dollar is subject to continued debasement via inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spendin.

Exempting bullion transactions from sales taxes is also not distortionary special treatment. Intermediate transactions are not meant to be taxed, and bullion is inherently held for exchange, not consumption. Other investment vehicles like stocks, currencies, or financial instruments are not subject to sales taxes—nor should they be.

Bullion exemptions are principled, not preferential.

Six states still have a minimum transaction value to qualify for their sales tax exemption. Transactions in Connecticut, Maryland, Massachusetts, New Jersey (for coins only), and New York must be at least $1,000 in value, and transactions in California must be at least $2,000. These minimum value requirements price low-income savers and investors out of the exemption, levying a particularly regressive taxTaxes can create different burdens on taxpayers of different income levels, measured by comparing taxes paid as a fraction of income. A regressive tax is one that creates a larger burden on lower-income taxpayers than on middle- or higher-income taxpayers.. It is not uncommon for savers to acquire bullion in small increments, and these policies punish them for not having enough money to buy large amounts.

Connecticut has already provided for its regressive minimum transaction to expire in 2027.

The minimums are especially regressive given the extreme regressivity of the inflation tax. Low-income earners are most impacted by inflation because of the Cantillon Effect, where early receivers of newly printed dollars spend it before price increases promulgate through the market, but late receivers experience the price increases before they see any of the new currency. Levying a regressively structured sales tax on bullion transactions doubles down on this regressivity.

State and local sales tax rates impact their competitiveness. High tax differentials between states tend to incentivize cross-border trade, like consumers buying cigarettes in a low-tax jurisdiction and smuggling them to high-tax jurisdictions. Bullion transactions are no different. Failing to properly exempt bullion from a state’s sales tax is likely to push buyers to jurisdictions that treat them correctly to avoid the tax, hurting domestic businesses.

Coin conventions where large bullion markets are established are especially likely to select locations that do not unduly burden bullion transactions. This is why Maryland carved out the Baltimore Convention Center when it attempted to curtail its sales tax exemption, though that particularly non-neutral example was reversed after only one year. States with an unprincipled sales tax risk pressuring big events out of state.

Many states also only exempt bullion minted in a government’s official capacity, which creates non-neutral treatment of privately minted bullion excluded from the exemption. While not so popular anymore, largely due to prohibitive policy, there is a storied history of privately minted money in the United States. It seems unlikely an entrepreneur like Christopher Bechtler would have been able to succeed if his coins were burdened with an additional tax that his federal competitors were immune to.

Improper tax treatment of bullion transactions and this special treatment of government bullion may exacerbate the Gresham’s Law effect of lesser valued money tending to drive out higher valued money.

Sales taxes are not the only burden on bullion. The Sound Money Defense League has a broader examination of states’ bullion and monetary policies.

The eight states that have limited their exemption—California, Indiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, and New York—should look to Connecticut’s recent reforms as a guide. The jurisdictions that have failed to exempt bullion transactions from their sales taxes at all—Hawaii, Maine, New Mexico, Vermont, Washington, and the District of Columbia—should join the rest of the country in treating bullion properly.

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