Are Stripe Fees Tax Deductible? Charges, 1099-K, and Filing

Yes, Stripe fees are tax deductible. The 2.9% + $0.30 per-transaction charge, along with international surcharges, currency conversion costs, chargeback fees, and the processing fee Stripe keeps when you issue a refund, all qualify as ordinary and necessary business expenses under federal tax law.¹ You claim them by reporting your gross sales as income and then subtracting the fees on the deductions line of your business return.

Why They Qualify

Section 162(a) of the tax code lets you deduct “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.”² Payment processing fees clear that bar easily. Almost every business that takes online payments uses a processor, and paying the fees is what makes collecting revenue possible.

The mechanics matter for why the deduction exists. When a customer pays you $100, Stripe keeps $3.20 and deposits $96.80. For tax purposes your gross income is still the full $100, because that is what the customer paid. The $3.20 comes off as a business expense. Skip the deduction and you pay tax on money that never reached your account.

Which Stripe Charges You Can Deduct

All of Stripe’s fees are deductible. Tracking them by category is worth the small effort because it makes reconciliation cleaner and shows where your processing costs are actually going.

Standard transaction fees of 2.9% plus 30 cents per successful domestic card payment.³
An additional 1.5% on cards issued outside the United States.⁴
Currency conversion charges of 1–2% when Stripe converts a foreign payment to U.S. dollars.⁴
Chargeback fees of $15 per dispute.⁵
The original processing fee on refunded transactions. Stripe does not return that fee when you issue a refund, and it remains deductible in the year you paid it.⁶

What the Deduction Saves You

Deducting Stripe fees lowers your taxable business income dollar for dollar. If you paid $4,000 in fees over the year and you’re in the 22% bracket, that’s roughly $880 off your federal income tax.

If you’re a sole proprietor or single-member LLC, the same deduction also reduces your self-employment tax. The SE tax is 15.3%—12.4% for Social Security and 2.9% for Medicare—applied to 92.35% of your net self-employment earnings, which are calculated after business expenses come out.⁷⁸ On that same $4,000, you’d save roughly another $566.

Reconciling Your Fees with Form 1099-K

If your business processed more than $20,000 in gross payments across more than 200 transactions, Stripe sends you a Form 1099-K.⁹ The One Big Beautiful Bill retroactively confirmed that $20,000/200-transaction threshold.¹⁰ You may receive one below those thresholds as well.

The 1099-K reports gross sales, meaning the full amount customers paid before Stripe took anything out. Pull your balance report from the Stripe Dashboard under Reports. It breaks down every fee collected during the year, along with gross amounts, fees, and net deposits. The gap between your 1099-K gross figure and your bank deposits should roughly equal your total Stripe fees. If it doesn’t line up, look for refunds, disputes, or payouts that straddled the calendar year.

This reconciliation is what keeps you out of trouble. The IRS gets a copy of your 1099-K. Report only the net deposits and your return will look like it’s short of the 1099-K figure, which can trigger a notice. Report the gross figure but forget to deduct the fees and you’ll overpay. Report the gross figure and deduct the fees, and both sides match. An accuracy-related penalty of 20% of the underpaid tax applies when the IRS treats a shortfall as negligence, which includes not reporting income shown on an information return like a 1099-K.¹¹

Where to Put the Deduction on Your Return

Sole Proprietors and Single-Member LLCs

Use Schedule C (Form 1040). Line 10, “Commissions and fees,” is the most direct fit. Some practitioners put processing fees on Line 27a (“Other expenses”) and describe them in Part V on Line 48, which the instructions define as covering “all ordinary and necessary business expenses not deducted elsewhere on Schedule C.”¹² Either placement is acceptable. Pick one, be consistent year to year, and don’t claim the same fees in both spots.

Records to Keep

Save your Stripe balance reports, 1099-K, bank statements, and any reconciliation worksheets for at least three years from the date you filed or the date you paid the tax, whichever is later. The window stretches to six years if you underreport gross income by more than 25%, and there’s no time limit at all if you never filed. Keep records indefinitely in that last scenario.¹⁶

1
Stripe. Are Payment Processing Fees Tax-Deductible? Here’s What You Should Know
2
Office of the Law Revision Counsel. 26 U.S. Code 162 – Trade or Business Expenses
3
Stripe. Pricing and Fees
4
Stripe. Managed Payments Pricing
5
Stripe. Chargebacks 101: What They Are and How Businesses Can Prevent Them
6
Stripe. Refunds for Businesses: A Guide to Their Meaning, Timing, and Financial Impact
7
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
8
Internal Revenue Service. Topic No. 554, Self-Employment Tax
9
Internal Revenue Service. Understanding Your Form 1099-K
10
Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill; Dollar Limit Reverts to $20,000
11
Internal Revenue Service. Accuracy-Related Penalty
12
Internal Revenue Service. Instructions for Schedule C (Form 1040) (2025) – Section: Part V. Other Expenses. Line 48
13
Internal Revenue Service. Instructions for Form 1120-S (2025) – Section: Line 20. Other Deductions
14
Internal Revenue Service. Instructions for Form 1120 (2025) – Section: Line 26. Other Deductions
15
IRS.gov. 2025 Instructions for Form 1065 – U.S. Return of Partnership Income
16
Internal Revenue Service. How Long Should I Keep Records?