Senate Bill 297 allows Alabama to exempt capital gains taxes on the sale of gold and silver in a bid to prioritize the earnings of citizens and to protect them from the harmful effects of inflation, currency debasement and increasing federal debt.
Under the new law, any profits or losses from the sale of precious metals, as reported on federal tax returns, will be excluded from the calculation of an Alabama taxpayer's adjusted gross income. This provision effectively shields individuals from punitive taxation on transactions involving constitutionally recognized forms of currency.
The bill, championed by Sen. Tim Melson (R-Florence) and Rep. Jamie Kiel (R-Russellville) and supported by pro-precious metals organizations like the Sound Money Defense League and Money Metals Exchange, was passed by the Alabama Legislature with bipartisan support. This reflects a broad recognition of the importance of sound money principles, particularly in an era of high inflation.
Speaking before the State Senate's Finance and Taxation Education Committee, Melson highlighted the historical significance of gold and silver as constitutionally recognized forms of currency.
"Gold and silver have served as pillars of economic stability throughout history and are even mentioned by name in the United States Constitution. By eliminating taxes on transactions involving these precious metals, we affirm our commitment to upholding the principles of sound money and protecting the savings of our constituents," Melson stated.
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It is widely acknowledged that "gains" from the sale of precious metals do not reflect genuine value appreciation but rather the ongoing depreciation of the U.S. dollar. Despite this, the Internal Revenue Service requires federal income taxes on such transactions, a stance most states also follow by default.
Jp Cortez, executive director of the Sound Money Defense League, emphasized Alabama's proactive stance amid inflationary pressures. "Inflation erodes the purchasing power of individuals' savings and undermines economic and social stability. Alabama's decision to opt out of this taxation scheme makes it the 13th state in the country to end this tax, with more states expected to follow," Cortez remarked.
More and more states exempting capital gains taxes on precious metals
Nebraska passed a similar bill earlier this year, while Arizona, Arkansas and Utah have approved comparable measures in recent years. In 2024, Iowa, Georgia, Oklahoma, Missouri, and Kansas also considered income tax exemptions, with several states approving the bill across multiple committees and chambers. (Related: Nebraska ends capital gains taxes on gold and silver sales.)
Alabama joins Utah, Wisconsin, Nebraska, and Kentucky in enacting pro-sound money legislation in 2024. Additionally, Rep. Alex Mooney (R-WV) reintroduced the Monetary Metals Tax Neutrality Act last week, aiming to eliminate the federal capital gains tax on all gold and silver coins and bullion.
With the passage of this bill, Alabama's current ranking of 28th in the 2024 Sound Money Index is expected to improve, reflecting the state's commitment to sound money principles.
Learn the latest developments in the global gold market at GoldReport.news.
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