Most investment fees are not tax deductible anymore
The Tax Cuts and Jobs Act of 2017 suspended the deduction for investment fees, advisory costs, and other miscellaneous expenses for individual taxpayers through 2025. This means if you pay a financial advisor, pay trading commissions, or incur other costs to manage your investments, you cannot reduce your taxable income by those amounts on your federal tax return.
The suspension applies to fees paid to brokers, investment advisors, tax preparers (for investment-related advice), and custodians who hold your securities. It also covers subscription costs for investment newsletters or research services. The only exception is if you are self-employed and these costs relate to your business — not your personal investments.
This rule affects most people who invest individually. If you have a 401(k) through an employer or a similar workplace retirement plan, fees deducted directly from your account are already pre-tax, so this suspension does not change how those work. The suspension only affects itemized deductions on your personal return.
Key Takeaways
- Individual investors cannot deduct investment advisory fees, brokerage commissions, or custodian fees on their federal tax returns under current law through 2025.
- Fees paid inside employer retirement plans like 401(k)s are already handled pre-tax and are not affected by this rule.
- Self-employed people may still deduct investment-related business expenses if the investments are part of their business, not personal holdings.
- State tax rules vary — some states still allow deductions that the federal government does not, so check your state's rules separately.
How the suspension works in practice
Before 2017, individual investors could deduct investment fees as miscellaneous itemized deductions, but only the amount that exceeded 2 percent of their adjusted gross income (AGI). For example, if your AGI was $100,000 and you paid $3,000 in investment fees, you could deduct only $1,000 ($3,000 minus the 2 percent threshold of $2,000).
The 2017 law removed this deduction entirely for tax years 2018 through 2025. When the suspension ends, the old 2 percent threshold rule is scheduled to return — but that is not certain, as Congress may extend the suspension or make it permanent. For now, you cannot deduct these costs at all.
This affects your tax bill directly. If you paid $2,000 in advisory fees last year, you cannot reduce your taxable income by that amount. You pay tax on the same income whether or not you paid the fees.
What counts as an investment fee
Investment fees include charges from financial advisors, robo-advisors, and wealth managers for managing your portfolio. They also include brokerage commissions (though many brokers now charge zero commission), custodian fees for holding your securities, and fees charged by mutual funds or exchange-traded funds (ETFs) — though those are already reflected in the fund's performance and not paid separately by you.
Subscription costs for investment research, stock-picking services, or financial newsletters also fall under this category. So do fees paid to a tax preparer specifically for advice on investment tax strategy or for preparing the investment portion of your return.
Fees that do not count include interest on margin loans (money you borrow to invest), which remains deductible as investment interest expense under different rules. State and local taxes paid on investment income are also handled separately and may have their own deduction limits.
Investment interest expense is still deductible
While investment fees are not deductible, investment interest expense — the interest you pay on money borrowed to buy investments — remains deductible under a separate rule. This applies if you take out a margin loan from your broker or borrow money specifically to purchase stocks, bonds, or other securities.
Investment interest is deductible up to the amount of your net investment income for the year. Net investment income includes interest, dividends, and capital gains from your investments. If you paid $5,000 in margin interest but had only $3,000 in investment income, you can deduct $3,000 this year and carry the remaining $2,000 forward to future years when you have more investment income.
This deduction requires you to itemize on your tax return and is claimed on Schedule A. It is separate from the investment fee deduction and was not affected by the 2017 law.
State tax rules may differ
Some states still allow deductions for investment fees that the federal government does not. New York, for example, permits a deduction for investment advisory fees on state returns even though they are not deductible federally. Other states follow federal rules exactly.
If you live in a state with an income tax, check your state's tax guidance or speak with a tax preparer familiar with your state's rules. A fee that is not deductible on your federal return might reduce your state taxable income, which could lower your state tax bill even if it does not help federally.
Self-employed investors and business-related investments
If you are self-employed and your investments are part of your business — for example, you are a real estate investor or a professional trader — investment-related expenses may be deductible as business expenses. This is different from personal investment fees and follows different rules.
A real estate investor, for instance, can deduct property management fees, accounting costs related to the rental business, and other ordinary business expenses. A professional securities trader might deduct research subscriptions and trading platform fees as business expenses. The key distinction is that these are business expenses, not personal investment costs.
If you think your situation falls into this category, work with a tax preparer or accountant who understands your specific business structure. The rules depend on how the IRS classifies your activity and your tax filing status.
What to do with investment fees on your return
If you paid investment fees in the past year, you do not report them anywhere on your federal tax return under current law. You do not deduct them, and you do not list them as a loss. They simply do not appear on your return.
Keep records of what you paid — statements from your broker, advisor, or custodian — in case the law changes or you need to reference them later. If the suspension ends after 2025 and the old rules return, you may want to know what you paid in prior years.
For state taxes, follow your state's rules. If your state allows the deduction, you will report it on your state return even if you cannot deduct it federally. Your federal and state returns may look different on this line item.
Frequently Asked Questions
Can I deduct fees I paid to a financial advisor?
No, not on your federal return. Investment advisory fees are suspended through 2025. Some states allow the deduction on state returns, so check your state's rules. If your advisor also provided tax preparation services, only the portion related to your business (if you are self-employed) might be deductible.
What if I paid investment fees before 2018?
You could have deducted them in years before 2018 under the old rules. Those past returns are closed unless you filed an amended return. The suspension applies only to tax years 2018 through 2025.
Are mutual fund expense ratios tax deductible?
No. Expense ratios are built into the fund's daily price and are not a separate fee you pay. They reduce your returns but are not deductible. You pay tax on the income the fund generates after those expenses are taken out.
Can I deduct fees from my 401(k) or IRA?
Fees deducted directly from a 401(k) are already handled pre-tax, so there is nothing to deduct. For IRAs, custodian fees paid outside the account can be deducted, but only if you file Form 8606 and meet other conditions. Fees paid from inside the IRA are not deductible.
What happens when the suspension ends in 2026?
The old 2 percent threshold rule is scheduled to return, but Congress may extend the suspension or change the rules. Do not count on being able to deduct these fees in 2026 — wait for Congress to act and for the IRS to issue guidance.