Selling Sneakers and Trading Cards on eBay: The 28% Collectibles Rate, Schedule C and the eBay Vault

What you pay on sneaker and trading card profits on eBay depends on what kind of seller you are. Buying to collect and selling years later makes you an investor: capital gains, with long-term gains on collectibles taxed at up to 28%. Regularly buying, breaking boxes, grading and listing for a margin makes you a dealer: Schedule C, income tax plus 15.3% self-employment tax, and inventory accounting for purchases. Purpose, frequency and how you operate decide it, not the label you choose.

Three statuses, three ways to report

Investor. You buy cards, coins or watches to collect and for appreciation, and sell a few over the years. Sale price minus cost (purchase price, grading, eBay fees, shipping) is a capital gain on Form 8949 and Schedule D. Held a year or less, it's taxed at ordinary rates; held longer, it's long-term, where most assets get 0%, 15% or 20%, but collectibles have their own rule.

Dealer or reseller. You buy and sell regularly for the spread, with steady sourcing and a listing and shipping routine. That's a business. An individual or single-member LLC reports on Schedule C and pays income tax on the net profit, plus 15.3% self-employment tax on 92.35% of net profit once it reaches $400. In exchange, expenses are deductible, and losses can offset other income within the rules.

Hobbyist. You mainly collect for fun and sell duplicates now and then. The income goes on Schedule 1 as other income; the cost of what you sold reduces it, but other expenses generally aren't deductible.

One person can be both: a long-held personal collection reported as investments, and a separate flipping operation reported as a business. That only works if the records are separate from the start, ideally with two eBay accounts.

Where the 28% comes from

IRS Topic 409 (updated September 2026) says net capital gains from selling collectibles, such as coins or art, are taxed at a maximum 28% rate. Long-held collectibles don't get the 15% rate most assets do: if your ordinary rate is below 28%, that rate applies; above it, the gain is capped at 28%. Higher earners may also owe the 3.8% net investment income tax.

What counts as a collectible? The Code (IRC §408(m)) lists works of art, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages and other tangible personal property the Treasury specifies. Sports cards and memorabilia are generally treated as collectibles in practice. Whether sneakers and streetwear are isn't spelled out, so it's a facts-and-circumstances question; don't assume 15%.

A dealer's books: inventory, breaks and grading

Inventory isn't expensed on purchase. Cards and shoes unsold at year-end stay in inventory and become cost of goods sold when they sell. In December 2025 eBay added a Your Cost field to listings for recording each item's cost, which makes the year-end count much easier.

Box breaks and bulk lots. When a box yields dozens of cards or a liquidation lot yields dozens of pairs, allocate the cost across the items on a reasonable basis, such as relative market value after the break, and use the same method every year.

Grading and shipping. Fees paid to PSA or other graders, and shipping to and from them, go into that card's cost and come off when it sells.

eBay fees. In 2026, trading cards and collectible card games are 13.25% without a Store and 12.35% with a Basic or higher Store, with 2.35% above $7,500. Sneakers of $150 or more are 8% without a Store and 7% with one, with no per-order fee; under $150 they fall under the standard 13.6%. Promoted Listings, labels, Store subscriptions and supplies are business expenses.

The eBay vault and Authenticity Guarantee

eBay's vault, now run in partnership with PSA as the PSA Vault, holds graded cards of $250 or more and is open only to U.S. buyers and sellers. Cards can change hands without leaving the vault, but every sale is a taxable sale: investors report the gain, dealers include it in revenue. A buyer who withdraws a card may owe use tax.

From September 2026, Authenticity Guarantee covers trading cards (raw and graded) of $200 or more and eligible coins of $500 or more, alongside sneakers from $100, watches from $2,000 and handbags and jewelry from $500. It's free for sellers and generally limited to U.S. sellers. Items that fail and come back are booked as returns.

Example (hypothetical numbers, to show the method)

Kevin lives in North Carolina and does two things on eBay in 2026. First, he sells four graded cards he bought in 2021 for $12,000. They cost $5,000 including grading, and eBay fees are about $1,500, so his long-term collectibles gain is $5,500. At a 22% ordinary rate, the tax is about $1,210; at a 32% ordinary rate it would be capped at 28%, about $1,540.

Second, he breaks boxes and buys loose cards every week and sells the singles, $40,000 for the year. Opening inventory is $0, purchases are $30,000 and cards costing $8,000 are unsold at year-end, so cost of goods sold is $22,000. eBay fees are $5,300, labels and sleeves $2,200, and grading is already in cost, leaving a net profit of $10,500. That goes on Schedule C, with self-employment tax of about $10,500 × 92.35% × 15.3% ≈ $1,484 plus income tax.

Reporting the box-break business as investing would skip self-employment tax he owes and invite an adjustment, and leave inventory and expenses unaccounted for. Putting the long-held collection on Schedule C would do the opposite and overpay self-employment tax.

When a company makes sense

As the reselling grows, an LLC limits liability but doesn't change the tax by default; it's still Schedule C. With steady, higher profit, an S corporation election lets you pay yourself a reasonable salary and leave the rest free of self-employment tax, at the cost of payroll and a Form 1120-S. Keep your personal collection out of the business entity so the two statuses don't blur.

Next steps

eBay accounts, fees, the 1099-K and personal-item sales are in our eBay guide; the 1099-K reconciliation is in the 1099-K guide and the S corporation election in the S corp guide. To run your own numbers, book a free 15-minute call or add WeChat YCLUSA.