The 28% Rate Gain Worksheet for collectibles, line by line

Sell a gold coin, a painting, or a rare stamp at a profit and the gain lands in a corner of the tax code most investors never visit: the 28% Rate Gain Worksheet buried in the Schedule D instructions. The worksheet is short, just seven lines, but it carries one of the most misunderstood numbers in personal finance. This page walks the worksheet line by line and corrects the myth that gives it a bad name.

The short answer: The 28% Rate Gain Worksheet collects your long-term collectibles gains and a few related adjustments, nets them, and sends the result to Schedule D, line 18. The 28% is a ceiling, not a flat rate — your collectibles gain is taxed at the lower of 28% or your ordinary marginal rate.

What the worksheet is, and why it exists

Most long-term capital gains enjoy the preferential 0%, 15%, or 20% rates. Collectibles do not. Congress carved out a separate, higher ceiling for them in Internal Revenue Code Section 1(h)(4), the provision that defines the “28-percent rate gain” category. A collectible, in the IRS’s words, is any long-term gain or deductible long-term loss from selling a collectible that is a capital asset — works of art, rugs, antiques, metals such as gold, silver, and platinum bullion, gems, stamps, coins, alcoholic beverages, and certain other tangible property.

The worksheet’s job is simply to gather every dollar that belongs in that 28% bucket, subtract the losses that should offset it, and hand a single net figure to Schedule D. You complete it when you have a collectibles gain or loss, or a Section 1202 small-business-stock exclusion, sitting in Part II of Form 8949. If you want the bigger picture of how any long-term gain is taxed once it reaches Schedule D, that belongs to the broader discussion of capital gains tax, not to the mechanics here.

The seven lines, and where each number comes from

Read the worksheet top to bottom and it tells a clear story: add up the collectibles income, add the Section 1202 adjustment, fold in collectibles gains that arrived through other forms, then subtract your long-term losses and carryovers. What survives is your 28% rate gain. Here is each line paired with its source.

Worksheet line	What you enter	Source form
1	Total collectibles gain or (loss)	Form 8949, Part II
2	Section 1202 small-business-stock exclusion (positive)	Form 8949, Part II, code Q
3	Collectibles gain from pass-through and installment sources	Forms 4684, 6252, 6781, 8824
4	Collectibles gain reported to you	1099-DIV box 2d, Form 2439, Schedule K-1
5	Net short-term capital loss, if any	Schedule D, line 7
6	Long-term capital loss carryover	Schedule D, line 14
7	Net result: your 28% rate gain	To Schedule D, line 18

Line 1 is the heart of it: the total of every collectibles gain or loss you reported on Form 8949, Part II. Line 2 captures the Section 1202 exclusion you claimed on qualified small business stock — entered as a positive number, and split by the exclusion percentage you used (50%, 60%, or 75% of the gain, entered in the corresponding fractions the instructions specify). The figures on Form 8949 carry letter codes in column (f) that route them here; the mechanics of those codes are spelled out in the Form 8949 column (f) adjustment codes guide. Lines 5 and 6 are where the worksheet protects you: current-year long-term losses and prior-year carryovers reduce the 28% gain before it is taxed, which is exactly why disciplined tax-loss harvesting in a taxable account can blunt a collectibles bill. Subtract the losses, and line 7 is the net 28% rate gain that travels to Schedule D, line 18.

A worked example: the gold coin

Numbers make the flow concrete. Suppose you bought a one-ounce gold bullion coin years ago for $1,500 and sold it this year for $3,500, a long-term gain of $2,000. On Form 8949, Part II you report $3,500 in proceeds and $1,500 in basis, mark the row with collectibles code C in column (f), and the $2,000 gain lands on line 1 of the 28% Rate Gain Worksheet. With no Section 1202 exclusion and no offsetting losses, lines 2 through 6 are blank, so line 7 is $2,000. That figure flows to Schedule D, line 18.

Here is where most people go wrong. They see the $2,000 on line 18 and assume they owe $560, which is 28% of $2,000. They almost certainly do not. The 28% is a maximum, and the actual tax is figured on the Schedule D Tax Worksheet, which stacks your income and applies the correct rate to each slice.

Why 28% is a ceiling, not a flat rate

The single most important sentence in this entire topic: your collectibles gain is taxed at the lower of 28% or your ordinary marginal rate. Section 1(h)(4) sets 28% as the cap that prevents collectibles from being taxed at the very top ordinary rates, but it does not raise anyone’s rate up to 28%. If your ordinary marginal rate is already below 28%, that lower rate is what applies to the gain.

Return to the gold-coin seller. Imagine that, after the standard deduction, the seller sits in the 12% or 22% ordinary bracket. The Schedule D Tax Worksheet does not multiply the $2,000 by 28%. It taxes the gain at the seller’s own ordinary rate, because that rate is lower than the ceiling. A seller in the 22% bracket pays roughly $440 on the $2,000, not $560. Only a taxpayer whose ordinary rate already exceeds 28% — the top brackets — actually hits the 28% cap. For everyone below it, the “28% collectibles tax” they dread is a number they never pay. The worksheet you see in the capital gains rate glossary entry is the same logic applied to the preferential rates; collectibles simply swap the 20% ceiling for a 28% one.

The common mistakes

Three errors recur. The first is treating 28% as flat, which we have now retired. The second is forgetting the loss lines: sellers enter their collectibles gain on line 1 and stop, overlooking that a long-term loss carryover on line 6 can shrink — even erase — the 28% gain before any rate applies. The third is misrouting the form. Collectibles gains do not only arrive through Form 8949; they can flow in through a 1099-DIV box 2d from a fund, a Form 2439 from a regulated investment company, or a Schedule K-1 from a partnership, and each belongs on line 4. Miss those and your line 18 is understated.

Run the worksheet honestly, let the losses do their work, and remember that line 18 is a sorting step, not a tax bill. The tax comes from the Schedule D Tax Worksheet — and for most sellers, it comes in well under 28%.

Sources

• IRS, Instructions for Schedule D (Form 1040), “28% Rate Gain Worksheet—Line 18” and the collectibles definition (works of art, metals such as gold/silver/platinum bullion, gems, stamps, coins): https://www.irs.gov/instructions/i1040sd
• 26 U.S.C. § 1(h), establishing the “28-percent rate gain” category and the rule that collectibles gain is taxed at the lower of 28% or the ordinary rate: https://www.law.cornell.edu/uscode/text/26/1