Fiscal Note
Fiscal Services Division
HF 659 – Capital Gains Tax, Exemption for Bullion, Coins, and Currency (LSB1638HV)
Staff Contact: Jeff Robinson (515.281.4614) jeff.robinson@legis.iowa.gov
Fiscal Note Version – New
Description
House File 659 exempts capital gains and losses that are the result of buying and selling
bullion, coins, and currency from the State income tax.
The term “bullion” means bars, ingots, or commemorative medallions of gold, silver, platinum,
palladium, or a combination of these where the value of the metal depends on its content and
not the form. As defined in Iowa Code section 423.3(91), the term “coins” or “currency” means
a coin or currency made of gold, silver; or other metal or paper which is or has been used as
legal tender.
The change is effective for tax years (TY) 2024 and after.
Background
The federal Internal Revenue Service (IRS) regards the items defined as bullion, coins, and
currency in the Bill as “collectibles” and provides federal Form 1040, Schedule D (part II, line
18), and the associated 28% Rate Gain Worksheet (see page D-12) for the taxation of capital
gains and losses that occur through the buying and selling of collectibles.
For purposes of the taxation of capital gains, the IRS considers investments in exchange-traded
funds (ETFs) that hold physical gold and other metals for the benefit of the ETF owners and that
are organized as trusts to be, for the ETF shareholders, the same as owning the physical metal
itself.
Assumptions
• The proposed capital gains income tax exemption applies not only to transactions where the
purchaser takes and maintains actual possession of the item, but also applies to situations
where the purchaser owns the items as a member of a collection of owners through financial
structures such as the SPDR Gold Shares (ticker GLD).
• The value of an ounce of gold has generally increased over the past 20 years, so over that
time period, positive capital gains would have been likely. In March 2003, the price of an
ounce of gold was approximately $335; for March 2013, the price was approximately
$1,590; and for March 2013, the price was approximately $1,910. This calculates to an
average annual increase over the first 10-year period of 16.9% per year and 1.9% per year
over the most recent 10-year period.
• Capital gains from buying and selling gold and similar items are reported on IRS Schedule D
(Capital Gains and Losses). For tax year (TY) 2020, the IRS reports that all federal
individual income taxpayers reported net capital gains on Schedule D totaling $1,121.2
billion and Iowa taxpayers reported $5.8 billion (0.5% of the U.S. total).
• Gold and other items are considered collectibles for federal taxation purposes and are
reported on Schedule D, part II, line 18. For TY 2020, the IRS reports that all federal
individual income taxpayers reported positive $5.2 billion on part II, line 18.
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• The percentage of part II, line 18, personal income that is the result of gold and similar items
covered by the capital gains exemption proposed in the Bill is not known. For this Fiscal
Note, the percentage is assumed to be 30.0%. Applying that percentage to the $5.2 billion
in part II, line 18, income results in $1.6 billion in federal capital gains from gold and similar
items. Applying the assumed 0.5% Iowa income share to the $1.6 billion yields $8.0 million
in capital gains income that is subject to Iowa income tax.
• Iowa’s top individual income tax rate is 5.70% for TY 2024, 4.82% for TY 2025, and 3.90%
for TY 2026 and after.
• The tax and surtax reductions estimated for a tax year are assumed to result in reduced final
income tax payments or increased income tax refunds when the tax return is due (the
TY 2024 estimated income tax reduction occurs in FY 2025).
Fiscal Impact
The capital gains income tax exemption for the buying and selling of bullion, coins, and currency
is projected to reduce State General Fund revenue by the following amounts:
• FY 2025 = $0.5 million
• FY 2026 = $0.4 million
• FY 2027 and after = $0.3 million
Sources
Internal Revenue Statistics of Income
Legislative Services Agency
SPDR Gold Shares Exchange-Traded Fund
/s/ Jennifer Acton
March 28, 2023
Doc ID 1370873
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov
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Statutes affected: Introduced: 422.7