Do capital gains taxes apply to individuals selling precious metals in Washington state?
Executive summary
Washington’s capital gains excise tax applies to individual capital gains above the standard deduction (about $270–278K), taxed at 7% up to $1 million of taxable gain and 9.9% on the portion above $1 million as of the 2025 tax year (retroactive to Jan 1, 2025) [1] [2]. Whether a sale of physical precious metals is subject to that state capital gains tax is treated differently in reporting: federal rules treat physical precious metals as “collectibles” for federal capital gains rates, while Washington’s law and follow-on 2025 budget and statute changes have removed or narrowed the prior sales‑tax exemption for bullion and extend other tax changes that affect bullion transactions [3] [4] [5].
1. Washington has a capital gains excise tax — rates, thresholds and scope
Washington imposes a capital gains excise tax on net long‑term capital gains allocated to the state: after a standard deduction (roughly $270,000 in recent years, adjusted annually), gains are taxed at 7% up to $1 million of taxable gain and at 9.9% on taxable gains above $1 million beginning with tax year 2025 [1] [2] [6]. State reporting and agency notices treat the levy as an excise tied to the act of selling or exchanging assets rather than a general income tax [7].
2. Federal tax treatment of precious metals is separate and calls them “collectibles”
At the federal level the IRS classifies certain precious metals and coins as “collectibles,” which subjects long‑term gains to special capital‑gains treatment (collections rate can reach higher ceilings than typical long‑term rates); short‑term gains on collectibles are taxed as ordinary income [8]. This is federal law and distinct from Washington’s state excise on capital gains [8].
3. Sales tax and bullion exemptions have changed and affect purchases, not just gains
Washington historically exempted many forms of monetized bullion and recognized bullion coins from retail sales tax (a 1985 rule), but recent legislation repealed or narrowed that exemption as part of the 2025 budget package; some outlets report sales tax on gold, silver and bullion will apply starting Jan 1, 2026, and the legislature explicitly repealed long‑standing precious‑metals sales‑tax preferences [4] [5]. Practical consequence: where you buy bullion may now trigger state sales tax, separate from capital gains reporting when you later sell [4] [5].
4. Does Washington’s capital gains tax apply when an individual sells physical precious metals? — competing signals
Available reporting gives two relevant but not fully reconciled points. Several tax advisers and news outlets describe Washington’s capital gains excise as applying broadly to long‑term gains from assets, which would include proceeds from sales of assets such as stocks, business interests and other capital assets [9] [1]. At the same time, some commercial‑facing summaries (e.g., gold dealer or bullion buying guides) state the 7% capital gains tax does not apply to sales of physical precious metal bullion but may apply to investment vehicles like ETFs or futures [3]. That creates a divergence between specialist bullion‑industry guidance and state tax guidance and analyses [3] [9].
5. How to read the discrepancy — what the sources imply and what they do not say
The Washington Department of Revenue and multiple law‑firm analyses emphasize a broad excise on long‑term gains allocated to Washington [1] [6]. Industry sources highlight longstanding technical distinctions (monetized bullion rules, coin definitions) and argue physical bullion sales may be treated differently for sales tax or capital gains purposes [3]. Available sources do not present a single, definitive state pronouncement in plain language saying “physical bullion sales are exempt from/subject to the capital gains excise,” so readers must treat both perspectives as active positions in current reporting [3] [1].
6. Practical implications and steps for sellers
If you realize significant gains from selling precious metals and you are a Washington resident or the gain is allocated to Washington, you face the state’s capital gains excise reporting and potential tax exposure consistent with the 7%/9.9% structure after the standard deduction [1] [2]. Sellers should not conflate sales‑tax treatment at the time of purchase with the capital‑gains excise at disposition — both matters changed in 2025–2026 legislation [4] [5]. For transactions where industry materials claim exceptions [3], taxpayers should seek authoritative confirmation from the Washington Department of Revenue or qualified tax counsel because current reporting shows disagreement and the stakes can be material [1] [3].
Limitations: this analysis uses available reporting and legal summaries; the sources show tension between industry guidance and state tax summaries but do not include a single definitive state FAQ stating the exact treatment of every type of physical bullion sale under the capital gains excise. Available sources do not mention a signed Washington Department of Revenue rule‑by‑rule breakdown resolving every bullion‑type scenario [1] [3].