On March 22, 2024, Wisconsin Governor Tony Evers signed Assembly Bill 29 and Senate Bill 33 into law, ending the state tax on the sale of precious metals. The legislation exempts precious metal bullion, including coins, bars, rounds, or sheets containing at least 35% gold, silver, copper, platinum, or palladium, from state sales tax.
Background and Legislative Changes
Before passing this law, Wisconsin taxed the sale of precious metals, which placed the state at a disadvantage compared to neighboring states like Iowa, Illinois, Minnesota, and Michigan. These states had already eliminated many precious metals taxes. The new law, effective March 2024, aligns Wisconsin with numerous U.S. states that have acknowledged the economic benefits of exempting precious metals from sales tax.
Rationale for the Tax Exemption
The removal of the sales tax on precious metals in Wisconsin was driven by several factors:
1. Economic Competitiveness
Some saw Wisconsin’s old tax policy as a deterrent for investors and collectors, who could easily purchase precious metals in neighboring states without incurring a sales tax. By eliminating the state tax on precious metals, Wisconsin hopes to retain and attract more business within the state, keeping investment dollars local.
2. Investment and Savings
Precious metals are often bought as a hedge against inflation and economic uncertainty. Taxing these purchases was viewed as penalizing individuals who sought to protect their savings through the purchase of tangible assets like gold and silver bullion. The exemption supports those looking to diversify their portfolios with gold, silver, and other metals.
3. Historical and Constitutional Context
Gold and silver have long been recognized as sound money. The U.S. Constitution even mentions these metals explicitly. The tax exemption is a step towards recognizing gold and silver as a form of currency rather than merely commodities, reinforcing their historical role in financial stability.
Pushback and Concerns
Investors and collectors enthusiastically supported the repeal of the sales tax on precious metals. However, critics of the bill voiced concerns about the potential loss of state revenue. Others worry that this move could encourage speculative investments, potentially increasing market volatility.
Efforts to Introduce Similar Legislation
Wisconsin is not alone in making this change. States like Mississippi, Tennessee, Arkansas, and Ohio have also repealed many sales taxes on precious metals in recent years. As more states move towards a tax-exempt status for the sale of precious metals, pressure mounts on other states to follow suit.
Impact on Investors and Collectors
The repeal of the sales tax makes purchasing precious metals more cost-effective for investors. This is especially beneficial for investors who buy in smaller increments, as the removal of sales tax reduces the cost burden. Collectors also benefit, as it becomes less expensive to acquire some collectible bullion items, depending on the state they are in. The change provides an incentive for both groups to invest in tangible assets that historically preserve wealth.
The repeal of the sales tax on precious metals in Wisconsin represents a significant shift in the state’s approach to bullion investment. By aligning with many other U.S. states, Wisconsin becomes more supportive of investors and collectors buying precious metal assets. This legislative change not only reflects the growing recognition of precious metals as a stable investment but also removes unnecessary barriers for Wisconsinites looking to preserve their financial security. If you are buying in a different state, it is imperative to know that a few states have identical tax laws, and it is beneficial to consult your state laws on precious metal taxes.
