The collectibles tax rate is a 28 percent maximum federal rate on long-term gains from collectibles such as art, antiques, and coins, and the IRS has said it will apply a look-through test to decide whether an NFT is a collectible.
Under the 2023 guidance, an NFT whose associated right or asset is a collectible (a digital artwork, for example) is taxed as a collectible. Short-term gains are ordinary income either way.
Why it matters: the rate difference between 20 and 28 percent on a large NFT gain is significant, and the characterization should be decided before the return is filed. See NFTs.
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