A Pokémon Card Sold for $2.8 Million and a Black Lotus for $2.2 Million. The Tax Code Was Written Before Either One Existed.

A Pokémon Illustrator graded CGC Mint 9 sold for $2.8 million at Goldin. An Alpha Black Lotus brought $2.2 million at auction in September 2026. A second Illustrator, graded PSA 9, beat both at $5 million through Heritage.

If you are a retiree or heir holding a card like these, the auction result raises a tax question that the Internal Revenue Code answers only partway. Magic: The Gathering was created in 1993 and Pokémon cards followed in 1996. The federal definition of a “collectible” is older than both games, and its list of categories makes no mention of trading cards.

Three Cards Ranked From Lowest to Highest Sale Price

Alpha Black Lotus: $2.2 Million

Black Lotus comes from Alpha, the first printing of Magic: The Gathering, and it is the most famous card the game has produced. Its rarity starts with that small first print run. Condition adds to it: early players shuffled, traded and played with their cards, so few copies survived with sharp corners and clean surfaces. Mint Alpha copies regularly bring multimillion-dollar figures at auction. Provenance counts too. A documented chain of ownership and a third-party grade lower the risk of a fake, and buyers pay for that.

Pokémon Illustrator, CGC Mint 9: $2.8 Million

The Illustrator was a prize for winners of an illustration contest that CoroCoro magazine ran in Japan in 1997. CoroCoro was sold only in Japan, so no English copies exist. It is believed that only 39 copies exist in total. That tiny population is the core of the card’s scarcity. This copy’s Mint 9 grade puts it near the top of the condition scale, which is rare for a card from the late 1990s.

Pokémon Illustrator, PSA 9: $5 Million

This is the same card with the same number grade, yet it sold for far more. The gap suggests buyers place a premium on PSA’s label and population report when pricing vintage Pokémon. With so few copies, each high-grade example that comes to market with clean provenance largely sets its own price.

What the IRS Sees When You Sell One

Start with the law. Under 26 U.S.C. § 408(m)(2), a collectible means “any work of art,” “any rug or antique,” “any metal or gem,” “any stamp or coin,” “any alcoholic beverage,” or “any other tangible personal property specified by the Secretary for purposes of this subsection.”

Coins and metals are named outright. Trading cards are not on the list. A card counts as a collectible only if it fits a named category, such as a work of art or an antique, or if Treasury specifies it under the § 408(m)(2)(F) catch-all. IRS Publication 550 describes collectibles gain using the same list: “a work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than 1 year.”

The capital gains rate rules borrow that definition. Under § 1(h)(5)(A), collectibles gain is gain on a collectible “as defined in section 408(m) without regard to paragraph (3) thereof” that is a capital asset held “for more than 1 year.” Section 1(h)(4) counts that gain as “28-percent rate gain,” and § 1(h)(1)(F) taxes it at “28 percent.”

• If the card is a collectible: Long-term gain is taxed at a maximum rate of 28%. Publication 550 adds that if you are otherwise subject to a lower rate, the 28% rate does not apply.
• If the card falls outside the definition: The gain is taxed like gain on a stock held for years, at 0%, 15% or 20%. In the tax-year 2025 edition of Publication 550, the 20% rate starts at taxable income of $600,051 for joint filers and $533,401 for single filers. A seven-figure sale tops both levels.

The law does not decide which of these applies to a Pokémon or Magic card. The Illustrator was born from a drawing contest, which supports treating it as a work of art. A card from the early 1990s supports an antique argument. The catch-all applies only once Treasury acts.

That uncertainty is the real issue. A seller who reports at 15% or 20% needs a reading of the law they can support. A seller who reports at 28% pays more in exchange for certainty.

Retirement accounts carry their own rule. Under § 408(m)(1), when an IRA buys a collectible, the purchase is “treated (for purposes of this section and section 402) as a distribution from such account in an amount equal to the cost to such account of such collectible.” Section 408(m)(3) exempts certain gold, silver and platinum coins described in 31 U.S.C. 5112, coins issued under state law, and bullion that meets contract-market fineness standards and is held by a qualifying trustee. Those assets can sit in an IRA without triggering a deemed distribution. Section 1(h)(5) ignores that exemption, though, so an IRA-eligible gold coin sold in a taxable account still produces collectibles gain.

Retirement Costs That Follow a Big Sale

A large gain also raises adjusted gross income. Medicare uses that income to set its income-related premium surcharges (IRMAA), and the same income figure helps determine how much of a Social Security benefit is taxable. Check the current IRMAA tiers in the latest official Medicare and Social Security notices before choosing when to sell.

Records matter as much as the rate. Publication 544 explains how to figure a gain or loss on a sale, and your purchase receipts and grading bills are what back up your cost basis. Opportunity cost matters too. The 10-year Treasury yielded 5.24% on October 9, 2026. That pre-tax benchmark is what a card has to beat after fees, insurance and the tax bill. Watch for Treasury guidance under the § 408(m)(2)(F) catch-all. Until it arrives, how a card is taxed depends on how you read the law.

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