Now in Effect: Nebraska Repeals State Capital Gains Taxes on the Sale of Gold and Silver

LINCOLN, Neb. (Jan. 7, 2025) – Last week, a law repealing the capital gains tax on the sale of gold and silver went into effect in Nebraska. The new law removes a barrier to using gold and silver as money.

Legislature Bill 1317 (LB1317) went into effect on Jan. 1, 2025. The extensive tax bill includes a provision that repeals state capital gains taxes on the sale of gold and silver bullion, defined as “coins, bars, ingots, notes, leaf, foil, film, or commemorative medallions of gold, silver, platinum, or palladium, or a combination of these, for which the value depends primarily on its content and not the form.”

Under the Nebraska code, taxpayers use federal adjusted gross income as a starting point for state taxes. LB1317 allows taxpayers to reduce their gross income for state purposes by the amount of any capital gains reported to the IRS on the sale of gold and silver. They also able to add capital losses on the sale of the same.

LB1317 passed Nebraska’s unicameral legislature by a 49-0 vote.

“Gold and silver are the only forms of currency mentioned in our Constitution and with that comes the people’s ability to use it as such without penalty from the government,” Sen. Ben Hansen said. “Saving, and using, gold and silver is our right and one of the only checks and balances to our federal government’s unending devaluation of our paper currency. ”

LB1317 also includes a provision that excludes central bank digital currency (CBDC) from the state definition of money under the state tax code. The impact of this change is unclear, but ostensibly, it would prohibit the state from accepting tax payments in the form of CBDC and create a roadblock to its implementation in Nebraska.

IMPACT

Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.

Exempting the sale of bullion from capital gains taxes takes an important step toward treating gold and silver as money instead of commodities. Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.

Imagine if the IRS sent you a bill every time the dollar strengthened against the euro. That’s effectively what capital gains taxes on gold and silver do. As the precious metals prices go up due to the devaluation of the dollar, the government levies a tax on you. It is essentially a tax on the superior performance of gold and silver as money.

“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support of an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.

BACKGROUND

The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Currently, all debts and taxes in most states are either paid with Federal Reserve Notes (dollars) which were authorized as legal tender by Congress, or with coins issued by the U.S. Treasury – very few of which have gold or silver in them.

The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat paper currency. Without the backing of gold or silver, the central bank can easily create money out of thin air.

This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.

State laws that facilitate and encourage the use of sound money create a playing field where people can push back against the Fed’s monetary malfeasance. Ultimately, it could create a scenario where people can drive out the “bad” fiat money with “good” sound money.

Tags: Capital Gains, Gold, Nebraska, Silver, Sound Money, Taxes