Support HB 2115/SB 5894 – Repealing Sales Tax on Precious Metals in 2026

Background

For more than 40 years, Washington exempted sales of investment-grade coins and bullion from retail sales tax. This policy recognized a simple reality: precious metals are not retail goods — they are savings and investment instruments.

However, Section 105, Act 1 of ESSB 5794 ended that exemption. Beginning January 1, 2026, transactions are now subject to:

• Retail sales tax

• A new Business & Occupation (B&O) tax

This creates a combined tax burden of up to 10.7%.

Because dealer spreads on bullion transactions are typically 2–3%, this tax completely eliminates profit margins. The result is predictable:

• Investment demand shifts to Oregon

• Investment demand shifts to Idaho

• Investment demand shifts online

Washington now joins Maryland as one of only two states in the nation taxing these transactions, while the overwhelming national trend is to exempt them.

We urge support for HB 2115 and SB 5894, which would restore the 1985 tax exemptions on precious metals and bullion.

What Washington’s Market Actually Looks Like

Washington precious-metals dealers operate on razor-thin margins (2–3%).

With a combined tax burden exceeding 10%, dealers cannot compete with:

• Oregon

• Idaho

• Online retailers

An almost 11% tax will:

• Shut down many local shops

• Fail to generate expected revenue

Addressing JLARC Claims

JLARC claims approximately 40% of tax savings benefit out-of-state buyers. However:

• Most retail sales are to Washington residents

• Shipments leaving the state are largely wholesale distributor transfers, not consumer sales

• No Washington dealer conducts live online retail bullion sales to out-of-state consumers

Additionally, JLARC surveyed roughly 20 dealers without disclosing identities or methodology — excluding many of Washington’s approximately 50 active bullion businesses. The data is therefore incomplete and unrepresentative.

Expected Economic & Fiscal Effects

Bullion transactions are:

• Highly mobile

• Extremely price-sensitive

A tax exceeding dealer margins simply drives purchases elsewhere.

This has already happened in other states:

Louisiana

• Repealed exemption in 2016

• Reinstated in 2019

• Businesses closed

• Revenue projections failed

Ohio

• Repealed exemption in the 1990s

• Reinstated in 2021

• Lost coin shows

• Demand shifted to neighboring states

In both cases, lawmakers concluded that taxing bullion generated less revenue than exempting it.

Washington’s projected gain of $56.1 million over four years (Senate Staff estimate) does not account for consumer flight. The likely outcome:

• Fewer in-state transactions

• Fewer local jobs

• Reduced secondary sales tax from travel, lodging, dining, and events

Early Evidence: Market Disruption

Coin shows are already being canceled or relocated:

• The Boeing Employees’ Coin Club (BECC) Show has been canceled

• The Pacific Northwest Numismatic Association (PNNA) Spring Show is moving to Portland

Once major events relocate, vendors, collectors, hotel bookings, and travel patterns tend to follow permanently.

One Month Under the New Tax: Real Impacts

From Redmond Rare Coins and other Washington dealers:

• King County sales tax: 10.4%

• When gold hit $5,400 per ounce, the tax alone on one coin was nearly $600

• During a record-price market surge, sales plummeted

• Customers are explicitly stating they are purchasing in Idaho and Oregon

• Idaho dealers report being overwhelmed by Washington customers

• Dealers in Spokane and Vancouver are discussing relocating

On February 2, 2026, KXLY News reported that Idaho coin and pawn shops have been flooded with Washington customers since January 1.

Idaho dealer Donivan Floyd of DJ’s Coins stated that approximately 70% of calls are from new customers, many from Washington — including as far away as the Tri-Cities.

This confirms that Washington residents are simply purchasing out of state.

Consumer Protection & Equity Concerns

Taxing bullion is not only poor fiscal policy — it is regressive.

• Retirees and middle-income households use precious metals to hedge against inflation

• Wealthier investors can shift to untaxed assets (stocks, bonds, real estate)

Additionally, taxation drives transactions:

• Out of state

• Underground

This removes consumer protections provided by licensed Washington dealers and increases fraud risk.

Broader National Context

As of January 2025:

• 45 states have eliminated sales taxes on gold and silver

This movement is bipartisan, recognizing bullion as:

• A form of money

• A savings vehicle

• Not a retail consumption product

Washington’s competitiveness has declined:

• Ranked 50th (last) in the 2026 Sound Money Index

• Ranked 45th in the 2026 State Tax Competitiveness Index

• Among the highest combined state and local sales tax burdens in the country

National Legislative Actions (2024–2025)

• Florida — HB 7031 (2025): Eliminated sales tax on gold, silver, platinum

• Kentucky — 2025: Overrode veto to reinstate exemption retroactively

• Idaho — HB 40 (2025): Eliminated capital-gains tax on gold and silver

• Utah — HB 306 (2025): Precious-metals electronic payments pilot

• Texas — HB 1056 (2025): Recognized gold and silver as legal tender

• Nebraska — 2025: Expanded exemption

• Alabama — SB 130 (2025): Advanced legal-tender recognition

The national trend is unmistakable: expansion of exemptions, not repeal.

Conclusion

Repealing the exemption under ESSB 5794, Section 105 will:

• Harm small businesses

• Reduce consumer protections

• Drive purchases out of state

• Fail to produce projected revenues

States that repealed exemptions reinstated them after:

• Business closures

• Revenue shortfalls

• Economic damage

Meanwhile, 45 states — including Florida, Kentucky, Idaho, Texas, Utah, Nebraska, and Alabama — have moved to expand or protect exemptions with broad bipartisan support.

Washington should not isolate itself.

We respectfully urge support for HB 2115 and SB 5894 to restore the 1985 exemption and protect Washington businesses and consumers.