For individual investors, brokerage fees are mostly not tax deductible. Advisory fees, account maintenance charges, and portfolio management costs cannot be written off on your federal return, and that rule is now permanent. Commissions and other transaction costs still carry a tax benefit, but through your cost basis rather than as a direct deduction. Margin interest is the main exception that survived, deductible up to your net investment income if you itemize.
Advisory and Management Fees Are Not Deductible
Before 2018, fees paid to financial advisors and portfolio managers were deductible as miscellaneous itemized deductions on Schedule A, but only to the extent they exceeded 2% of your adjusted gross income, and only if you itemized. The Tax Cuts and Jobs Act of 2017 suspended that deduction entirely starting with the 2018 tax year.
Many investors expected the deduction to come back for 2026. It didn’t. The One Big Beautiful Bill Act, signed on July 4, 2025, made the suspension permanent. The statute now bars all miscellaneous itemized deductions for any tax year beginning after December 31, 2017, with no sunset date.1Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
In practical terms, this means you cannot deduct:
- Advisory and portfolio management fees
- Custodial and account maintenance fees
- Financial planning charges
- Asset management costs
The underlying authority to deduct expenses tied to producing income still exists in Section 212 of the Internal Revenue Code.2Office of the Law Revision Counsel. 26 USC 212 – Expenses for Production of Income But because these are classified as miscellaneous itemized deductions, the permanent suspension blocks them from producing any benefit on an individual return, whether you itemize or take the standard deduction.
Commissions and Transaction Costs Adjust Your Cost Basis
Transaction costs work differently. Commissions, mutual fund load fees, and similar charges you pay when buying or selling securities are not current-year expenses at all. They become part of the investment’s cost basis, which determines your taxable gain or loss when you sell.
Buy $10,000 of stock and pay a $50 commission, and your cost basis is $10,050. Sell it later for $15,000 after another $50 commission, and your net proceeds are $14,950. Your taxable gain is $4,900, not $5,000.3Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses
Mutual fund fees follow the same logic. Acquisition charges get added to your basis in the shares; redemption fees reduce your sale price.3Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses If you use an automatic investment service, your basis in each share includes your proportional share of the broker’s commission.
The benefit is real but deferred. You don’t get an immediate write-off; you get a smaller capital gain or a larger loss whenever you eventually sell, which you report on Form 8949.4Internal Revenue Service. Instructions for Form 8949 For a long-term holder, a commission paid today might not reduce taxes for another decade.
Margin Interest Is Still Deductible
If you borrow on margin from your brokerage to invest, the interest you pay on that loan is generally deductible. Investment interest is governed by its own section of the tax code, so the TCJA changes and the OBBBA permanence did not touch it.
The limit: you can only deduct margin interest up to your net investment income for the year. Net investment income means dividends, interest, short-term capital gains, and royalties, minus investment expenses. Interest beyond that cap carries forward to future years.5Office of the Law Revision Counsel. 26 USC 163 – Interest
You calculate the allowable amount on Form 4952 and report it on Schedule A, which means you have to itemize to use it.6Internal Revenue Service. About Form 4952, Investment Interest Expense Deduction Qualified dividends and long-term capital gains are excluded from investment income by default. You can elect to include them to raise your cap, but that election strips those gains of their preferential rate and taxes them at ordinary income rates instead. Whether the trade helps depends on your bracket and how much interest you’re carrying.
If you pay margin interest, don’t assume your broker’s year-end statement will flag the deduction for you. It often won’t.
Fees Inside IRAs and 401(k)s
Fees charged inside tax-advantaged accounts are never deductible on your personal return. The account already provides a tax benefit through deferral or tax-free growth, and the IRS does not let you stack another deduction on top of that.7Internal Revenue Service. Retirement Topics – Fees
When fees come out of the account balance itself, they simply shrink the pool. A fee pulled from a Traditional IRA reduces tax-deferred dollars. A fee pulled from a Roth IRA is arguably worse, because those were dollars that would have come out tax-free in retirement.
Before the TCJA, there was a narrow workaround: paying IRA custodial or administrative fees out of pocket, rather than from the account, could qualify as a miscellaneous itemized deduction. That path is now permanently closed. Paying Roth IRA fees from your checking account still makes sense to preserve tax-free compounding, but it produces no deduction.
One caution: only fees tied to managing the investments inside the account should be billed to the IRA. Fees for broader financial planning or personal tax preparation shouldn’t be charged against the IRA, because the IRS could treat them as a taxable distribution or a prohibited transaction.
Trusts and Estates
Non-grantor trusts and estates file on Form 1041 and face the same suspension on miscellaneous itemized deductions.8Internal Revenue Service. About Form 1041, U.S. Income Tax Return for Estates and Trusts A separate rule lets them deduct administration costs that would not have been incurred if the property were held outside a trust, treated as above-the-line and so outside the suspension.1Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions Trustee compensation, fiduciary return preparation, and trust legal fees generally qualify. Routine investment advisory fees generally do not, under the Supreme Court’s ruling in Knight v. Commissioner.9Justia. Knight v. Commissioner, 552 U.S. 181 (2008) Only an incremental fee charged specifically because the account is a trust can qualify, per Treasury regulations.10GovInfo. 26 CFR 1.67-4 – Costs Paid or Incurred by Estates or Non-Grantor Trusts
What to Do When Fees Aren’t Deductible
With no deduction to soften the blow, every basis point in fees now comes straight out of your after-tax returns. Switching from an actively managed fund charging 1% to an index fund charging a fraction of that saves money that was never going to offset against taxes anyway.
Where you pay matters too. If an advisor manages both a taxable account and a Roth IRA for you, billing the fee to the taxable account preserves the Roth’s tax-free compounding. Before 2018, paying from the IRA sometimes made sense for the deduction. It doesn’t now.
Keep records of commissions and transaction fees, especially for shares bought through automatic investment plans or dividend reinvestment, where each lot has its own basis. Those are the fees that still reduce your tax bill, even if you have to wait until you sell to see it. And if you pay margin interest, run the Form 4952 calculation yourself. It’s the one brokerage-related write-off individual investors still have.