Can You Deduct Brokerage Fees From Capital Gains?

You cannot deduct brokerage fees from capital gains as a line item on your tax return, but trading commissions still lower your tax bill by adjusting the numbers that feed into the gain calculation. Buying commissions are added to your cost basis. Selling commissions come out of your proceeds. Ongoing advisory and management fees, by contrast, produce no tax benefit at all under current law. That split is where most of the confusion happens.

How Trade Commissions Change the Gain Calculation

The IRS defines basis for stocks and bonds as the purchase price plus costs of purchase, including commissions and recording or transfer fees.¹ Buy 100 shares at $50 with a $10 commission and your basis is $5,010, not $5,000.

The sale side mirrors it. Your broker subtracts its commission from the gross sale proceeds before reporting them on Form 1099-B,² and the IRS treats those selling expenses as a reduction in the amount you realized from the sale.³ Sell those same shares for $6,000 with a $15 commission and your net proceeds are $5,985. Taxable gain: $975, not $1,000.

You never enter the commission anywhere as a deduction. It is already inside the two figures that produce the gain.

Other Costs That Get Added to Basis

Account transfer fees follow the same rule. The IRS treats transfer fees as part of the cost of acquiring or holding the asset, so they can be added to your basis.⁴ Keep the receipt. Years later, when you finally sell, that fee is easy to forget.

Mutual fund front-end loads and back-end redemption fees work like commissions too. A load raises your basis at purchase; a redemption fee lowers your proceeds at sale.

Reinvested dividends and capital gains distributions each create a new purchase lot with its own basis, and any commission on that reinvestment purchase goes into the lot along with the reinvested amount.⁵ This matters because those dividends were already taxed as income the year you received them. Leaving them out of basis means paying tax on the same money twice. Most brokerages track this automatically for covered securities, but reinvestment lots purchased before 2012 may not appear on your Form 1099-B, so check the older ones against your own records.

Which Shares You Sell Also Changes the Math

If you bought the same stock at different times and prices, the method you use to identify which shares you sold can move your taxable gain more than any commission adjustment.

First-in, first-out is the usual default. Your oldest shares go first, which in a rising market tends to produce the largest gain.
Specific identification lets you tell the broker at the time of sale exactly which lots to sell, so you can pick the ones with the highest basis. You have to identify the shares when you sell, not after the fact.
Average cost is available only for mutual fund shares and certain dividend reinvestment plan shares. You divide total cost by total shares to get a per-share basis.⁵

Advisory and Management Fees Give You Nothing

Percentage-of-assets fees charged by wealth managers and robo-advisors follow different rules. They do not adjust your basis, and they do not reduce your proceeds. They cover broad account oversight rather than any specific transaction, so the IRS treats them as personal expenses.

Before 2018, these fees were deductible as miscellaneous itemized deductions to the extent they exceeded 2% of adjusted gross income. The Tax Cuts and Jobs Act of 2017 suspended that deduction starting in 2018, and a 2025 amendment removed the original sunset date entirely, making the suspension permanent.⁶ There is no scheduled expiration. An advisory fee of 0.25% or 1.50% of assets under management delivers zero direct tax benefit.

What About the Fees Inside a Mutual Fund or ETF

Internal expense ratios sit in a third category. A fund’s management fee, 12b-1 fee, and operating costs are deducted from net asset value each day. You never see them as a separate charge on your statement, and you cannot add them to basis or deduct them. The share price already reflects the cost. They reduce your total return without creating any tax entry you can claim.

Retirement Accounts Are Outside This Regime

Commissions and advisory fees paid inside a traditional IRA, Roth IRA, or 401(k) have no effect on your current tax return. Gains inside these accounts are not taxed until withdrawal (or never, for qualifying Roth distributions), so there is no capital gain to adjust. The basis rules above only apply in taxable brokerage accounts.

Paying an advisory fee from inside your IRA for management of that same account is generally not treated as a taxable distribution. Paying fees from your IRA for management of a different, outside account would be treated as a distribution and can trigger early withdrawal penalties. Keep retirement account fees inside those accounts and taxable account fees outside them.

Where This Shows Up on Your Return

Commissions do not appear as a separate line anywhere. Each sale goes on its own row of Form 8949, with net proceeds in column (d) and adjusted cost basis in column (e).⁷ Most brokers already net the selling commission out of proceeds on Form 1099-B, so you carry the numbers straight over. If a broker reports gross proceeds without the commission adjustment, enter code “E” in column (f) and the selling expense in column (g) to correct it yourself.

The 1099-B is your starting point. It reports gross proceeds and, for covered securities, the cost basis.² Check the basis against your own records, especially for older lots. Brokers sometimes miss reinvested dividends or older transfer fees. If the reported basis is wrong, fix it on Form 8949 through columns (f) and (g) rather than overriding column (e), because the IRS matches your return against the 1099-B the broker filed.

Totals from Form 8949 flow to Schedule D, which separates short-term gains (assets held one year or less) from long-term gains (held more than one year). Long-term gains are taxed at 0%, 15%, or 20% depending on taxable income; short-term gains are taxed as ordinary income. That is where a small commission adjustment can occasionally do real work: if it converts a short-term gain into a short-term loss, and your total losses for the year exceed your gains, you can deduct up to $3,000 of the excess against ordinary income ($1,500 if married filing separately) and carry the rest forward indefinitely.⁸

1
Internal Revenue Service. Publication 551 (12/2025), Basis of Assets
2
Internal Revenue Service. Instructions for Form 1099-B (2026)
3
Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses
4
Internal Revenue Service. Topic No. 703, Basis of Assets
5
Internal Revenue Service. Mutual Funds (Costs, Distributions, etc.) 1
6
Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
7
Internal Revenue Service. Instructions for Form 8949 (2025)
8
Internal Revenue Service. Topic No. 409, Capital Gains and Losses