How Will Nebraska's Decision to End Capital Gains Taxes on Gold and Silver Impact the Sound Money Movement?
- Mark Lafond, RA
- Aug 24, 2024
- 7 min read
Updated: Oct 9
Are We Returning to the Gold Standard?
Nebraska’s LB 1317 marks a decisive shift in state-level monetary policy by removing state income-tax treatment of capital gains and losses arising from transactions in gold and silver and by clarifying that a central bank digital currency (CBDC) does not constitute lawful money under state law.
Framed by Governor Jim Pillen’s signature and steered through the legislature with sponsorship by Senator Ben Hansen, the measure positions Nebraska as the twelfth state to exempt such gains at the state level. In policy terms, it signals a renewed skepticism toward inflationary pressures and a defense of individual financial autonomy, ideas historically associated with “sound money.” [1]
What LB 1317 Does
LB 1317 amends Nebraska’s tax code so that gains or losses from the sale of precious metals are excluded from the calculation of a taxpayer’s Nebraska adjusted gross income. In practice, residents who realize a profit (or loss) on bullion or coin sales must still comply with federal reporting, but Nebraska now “backs out” those amounts for state purposes.
The statute also defines “central bank digital currency” and makes explicit that CBDC is not “lawful money” for purposes of Nebraska law, preventing any automatic legal equivalence to cash within the state’s framework. This dual structure, tax neutrality for monetary metals and definitional limits on CBDC, captures the bill’s twin aims: facilitate the use of metals as an inflation hedge while pre-committing to privacy-preserving money definitions in state commercial law. [2]
Why the Change Matters to Households
The federal Internal Revenue Code treats most precious metals as “collectibles,” with long-term gains subject to a rate of up to twenty-eight percent, separate from the typical capital-gains brackets that apply to equities or real estate. States cannot alter federal treatment, but they can remove the state layer of taxation.
For Nebraskans who regularly rebalance their holdings in bullion or coins, eliminating the state-level tax drag reduces friction and clarifies planning, especially when gold and silver function as savings instruments rather than speculative trades. By legitimizing metals as a mainstream household hedge, the policy also normalizes diversified savings behavior at a time of uncertain price stability. [3]
Constitutional and Historical Grounding
Sound-money arguments often reference Article I, Section 10 of the U.S. Constitution, which bars states from making any thing but gold and silver coin a tender in payment of debts. Although modern jurisprudence does not resurrect an automatic specie standard, the clause has enduring rhetorical force for state lawmakers who wish to recognize monetary metals as legitimate savings media.
Historically, the Coinage Act of 1792 established the mint, defined the dollar, and specified metallic content, tying the early republic to a bimetallic regime. Long before that, ancient economies—from Mesopotamia to Rome—relied on gold and silver coinage (e.g., the aureus and denarius) as durable stores of value and media of exchange, demonstrating the cross-civilizational durability of metallic money. [4]
The Anti-CBDC Provision in Context
LB 1317’s treatment of CBDCs aligns Nebraska with a cohort of states that have begun to update their statutes or Uniform Commercial Code (UCC) provisions to address digital instruments issued by central authorities. Supporters argue that excluding CBDC from the definition of “money” protects privacy and limits the programmability of retail transactions by a central bank or executive agency.
Parallel initiatives in states such as Florida, Tennessee, and North Carolina restrict official use or classification of a CBDC, while congressional proposals have sought to preempt a retail CBDC absent explicit authorization from the legislature. Nebraska’s move therefore nests within a broader national debate about whether programmable, centrally issued currency would erode financial autonomy. [5]
A Growing State-Level Movement
Nebraska’s reform arrives amidst a broader trend. Over the past decade, multiple states have advanced sales-tax exemptions on bullion, removed state-level capital-gains treatment on metals, or recognized coins and bullion as legal tender for limited purposes. Advocacy organizations have tracked these changes via comparative “sound money” indices, creating a policy competition among states that wish to attract bullion businesses, reassure savers, and signal a preference for monetary diversity. Nebraska’s entry as the twelfth state on the capital-gains dimension illustrates the momentum of this movement, even as federal tax rules remain unchanged. [6]
Economic Implications of Sound-Money Policies
Anchoring savings in scarce, tangible assets can dampen the erosive effects of inflation on household balance sheets. When states remove tax disincentives on gold and silver, citizens face a more neutral choice among savings vehicles—bank deposits, equities, real estate, and bullion.
A lower after-tax penalty for converting between dollars and metals can also improve liquidity in local bullion markets, narrow bid-ask spreads, and support small dealers. At a macro level, the changes do not replace monetary policy; rather, they allow households to self-insure against monetary shocks, reinforcing resilience without demanding federal reforms. [7]
Legal Framework Surrounding Precious Metals
The legal status of monetary metals in the United States blends constitutional text, federal statutes, and tax regulation. Congress has the delegated authority to coin money and regulate its value; statute and administrative guidance define coinage, bullion programs, and tax categories; the IRS governs reporting and rates for gains and losses.
Against that backdrop, state measures like LB 1317 fit a familiar federalism pattern: states cannot redefine the dollar or alter federal tax treatment, but they can calibrate their own tax codes, sales-tax exemptions, and commercial definitions to reflect a policy preference for monetary metals. This division of competence explains how Nebraska can effect a real, practical change for residents without touching federal law. [8]
Impact on State Taxation and Administration
Removing capital-gains taxation on bullion at the state level reduces compliance friction for taxpayers and administrators alike. Tracking basis and lot identification for small, frequent bullion trades can be complex; eliminating state-level gains/losses reduces both error risk and administrative workload.
While exemptions can produce headline revenue losses, states often observe offsetting behavior: higher in-state transaction volume, stronger small-business activity among bullion dealers, and incidental revenue from ancillary purchases and services. The net fiscal effect depends on local market size and participation, but the simplification alone carries meaningful value to residents. [9]
Political Dynamics of Sound-Money Advocacy
Coalitions advancing sound-money reforms cut across familiar partisan lines. Libertarians emphasize constitutional language and privacy; fiscal conservatives focus on inflation hedging; some progressives view local bullion markets as a democratized form of savings outside concentrated financial intermediation. Industry stakeholders, consumer advocates, and policy institutes craft model language, provide testimony, and score states on legal friendliness toward metals. LB 1317’s success mirrors this template: a discrete technical change nested within a larger narrative about individual autonomy and institutional trust. [10]
Global Trends: Central Banks and Households
Internationally, central banks have expanded gold reserves in recent years as a hedge against currency volatility, sanctions risk, and shifting geopolitical blocs. This top-down accumulation complements bottom-up household demand for coins and bars, reinforcing gold’s dual identity as both an official reserve asset and a retail savings vehicle. In this environment, state laws that reduce friction on bullion ownership align local policy with global patterns in risk management and reserve diversification. [11]
Technology and the Digitization of Bullion
Tokenized bullion, digitally native claims on vaulted, identifiable bars, has emerged as a bridge between traditional metals and modern settlement rails. Properly structured tokens allow fractional ownership, rapid transfer, and transparent attestation of bar lists and serial numbers, potentially lowering custody and transaction costs while preserving a path to physical redemption. For Nebraska residents, the combination of state-level tax neutrality and improved digital rails expands the palette of savings tools, allowing households and small businesses to blend analog scarcity with digital convenience. [12]
Environmental and Social Considerations
Sound-money policy intersects with the realities of mining. Conventional extraction methods can impose serious environmental burdens, cyanide heap-leaching, tailings management, and water contamination among them. A robust metals ecosystem should therefore pair financial freedom with responsible sourcing.
Advances in biomining and improved recycling technologies can mitigate impacts, while supply-chain certification and traceability programs align bullion purchases with environmental stewardship and human-rights standards. Policymakers and consumers who value sound money can simultaneously demand sound practices. [13]
Education and Public Literacy
As states adjust statutes around metals and digital instruments, financial literacy becomes pivotal. Citizens should understand the difference between federal and state tax treatment, the mechanics of reporting gains and losses, the tradeoffs embedded in CBDC design, and the historical reasons metals remain relevant. Universities, nonprofits, and industry groups have begun to fill this gap through courses, primers, and public-facing reports. A legally durable reform like LB 1317 is most effective when the public can navigate it confidently. [14]
Practical Takeaways for Nebraskans
Residents who buy and sell bullion should note: (1) federal reporting and taxation still apply under current IRS rules for “collectibles”; (2) Nebraska now excludes those gains and losses from state AGI; (3) careful record-keeping remains essential for federal purposes, including basis tracking and Form 8949/Schedule D; (4) CBDC has a defined and limited status under Nebraska law, which may influence future UCC interpretations and contracting practices. Consulting a qualified tax professional is prudent, especially for high-frequency traders or those integrating tokenized bullion with traditional holdings. [15]
Outlook
LB 1317 is unlikely to be the last word in state-level monetary reform. As inflation dynamics evolve, as federal CBDC debates mature, and as tokenized assets widen access to vaulted metals, other states will weigh similar measures. Nebraska’s package offers a workable blueprint: remove state tax friction on monetary metals, clarify the legal status of CBDC, and let households choose among savings media without punitive bias. In that sense, the law does not attempt to re-create a nineteenth-century specie regime; it simply restores neutrality and preserves options—principles well suited to a plural, innovative financial system. [16]
Works Cited
“Nebraska Ends Income Taxes on Gold and Silver, Becomes 12th State to End Capital Gains Taxes on Monetary Metals.” Yahoo! Finance (Money Metals Exchange press release), 26 Apr. 2024. https://finance.yahoo.com/news/nebraska-ends-income-taxes-gold-140000302.html
“Nebraska ends income taxes on Gold and Silver, declares CBDCs are not lawful money.” FXStreet, 25 Apr. 2024. https://www.fxstreet.com/analysis/nebraska-ends-income-taxes-on-gold-and-silver-declares-cbdcs-are-not-lawful-money-202404251631
Internal Revenue Service. “Topic No. 409 — Capital Gains and Losses.” IRS.gov. https://www.irs.gov/taxtopics/tc409
United States Mint. “Coinage Act of April 2, 1792 (Historical Document).” USMint.gov. https://www.usmint.gov/learn/history/historical-documents/coinage-act-of-april-2-1792
Congress.gov. “H.R. 5403 — CBDC Anti-Surveillance State Act (118th Congress).” https://www.congress.gov/bill/118th-congress/house-bill/5403
Sound Money Defense League. “Sound Money Index: Gold & Silver Laws by State.” MoneyMetals.com. https://www.moneymetals.com/resources/sound-money-index
“Nationwide gold & silver tax cuts: 13 states scrap capital gains—Jp Cortez.” Kitco News, 15 May 2024. https://www.kitco.com/news/article/2024-05-15/nationwide-gold-silver-tax-cuts-13-states-scrap-capital-gains-fed-high
U.S. Constitution Annotated. Article I, Section 10. Library of Congress. https://constitution.congress.gov/browse/article-1/section-10/
Arizona Legislature. “HB2014 (2017): Exempting State Capital Gains on Gold & Silver.” (Overview). https://www.azleg.gov/legtext/53leg/1r/summary/h.hb2014_04-24-17_astransmittedtogovernor.pdf
Nebraska Legislature. “LB 1317 (2024): Revenue and CBDC-Related Provisions.” (Overview page). https://nebraskalegislature.gov
World Gold Council. “Central bank gold statistics.” Goldhub. https://www.gold.org/goldhub
Paxos. “Pax Gold (PAXG): Tokenized, LBMA-Backed Gold.” https://www.paxos.com/pax-gold
U.S. EPA. “Treatment/Environmental Concerns for Cyanide Heap-Leach and Tailings Activities.” EPA Archive. https://nepis.epa.gov
Nebraska Department of Revenue. “2024 Nebraska Legislative Changes (including LB 1317 references).” https://revenue.nebraska.gov/about/2024-nebraska-legislative-changes
Internal Revenue Service. Schedule D Instructions (Capital Gains and Losses). IRS.gov. https://www.irs.gov/instructions/i1040sd
Florida Senate. “CS/HB 7049 (2023): CBDC Excluded from UCC ‘Money’ Definition.” (Bill analysis). https://www.flsenate.gov/Session/Bill/2023/7049/Analyses
_______________________________________________________________________________
