Heritage Auctions just sold a signed 1995 Michael Jordan baseball card for $625,250. The card is a 1995 Upper Deck SP Top Prospects autograph from Jordan’s minor league baseball years. Cards like that often sit in a collection for decades before anyone sells.

Imagine a 64-year-old collector who receives Social Security and wants to sell a prize card. His first worry is the retirement earnings test, which holds back benefits when people under full retirement age (FRA) earn too much.

Since he’s selling an investment collectible and doesn’t run a card business, the gain counts as $0 toward the earnings test. The IRS, however, uses special rules for collectibles.

FRA is 67 for anyone born in 1960 or later. Social Security counts only wages and net self-employment earnings before that age. In 2026, it holds back $1 of benefits for every $2 earned above $24,480.

Investment gains fall outside that test. A six-figure auction check from a personal collection won’t set off any withholding, so his monthly deposit keeps arriving on schedule.

Only the gain gets taxed. If he paid $100,000 for the card and auction costs total $50,000, the taxable gain is $475,250.

Sports cards are generally treated as collectibles for federal capital-gain purposes. Long-term gains on collectibles can face a maximum tax rate of 28%, compared with the 20% top rate on stocks. At the full 28%, the federal bill on this gain would be about $133,070.

The key is maximum. Some of the gain falls into lower brackets and faces less than 28%. A separate tax on net investment income can push the effective rate higher. Short-term gains (held one year or less) are taxed as ordinary income.

The earnings test ignores the gain, but the formula for taxing Social Security includes it. The gain increases adjusted gross income (AGI), which feeds into combined income: AGI plus tax-exempt interest and half of Social Security benefits.

A single taxpayer has some benefits become taxable once combined income passes $25,000. Above $34,000, up to 85% can be taxed.

Say he collects $30,000 a year in benefits and has $10,000 of other income. Half his benefits is $15,000, putting combined income at $25,000. None of his Social Security is taxed.

Add the card gain and combined income jumps to $500,250. Now $25,500 of the benefits becomes taxable income at the full 85% rate. His deposit stays the same size, but that money now shows up on his return as ordinary income.

A retiree selling one card held as an investment is different from someone buying inventory to resell. If the activity rises to the level of a trade or business, the net profit can become self-employment income and bring the earnings test back into play.

No fixed number of sales decides the question. How often he sells, why he bought the cards, and how he runs the activity all matter.

A card bought decades ago for very little has a much larger taxable gain than one bought recently. Paperwork shows the difference.

1. Original purchase receipt or proof of cost. Missing cost records can inflate the gain he reports and make basis harder to prove later.
2. Purchase date. This determines whether long-term collectibles rules or short-term ordinary income rules apply.
3. Grading, authentication and selling costs. Some costs may increase basis or reduce the amount realized, depending on when and why they were incurred.
4. Other income for the year. Knowing how close he is to the $25,000 and $34,000 limits shows how much taxable income the sale will set off from Social Security.
5. Capital losses elsewhere. Losses on other investments can offset part of the gain.

The $625,250 result looks like one giant payday, but the IRS and Social Security each view it differently. The gain can count as $0 of earnings for the retirement test while still facing collectibles tax rates and pushing more benefits into taxable territory.

The mistake hardest to undo is selling before gathering cost records and mapping out the year’s income (this is one of several silent retirement tax traps we cataloged in a free guide here). An hour with an adviser before consigning the card can show where the real bill lands.

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