For individual investors, brokerage fees are generally not tax deductible in 2026. Advisory fees, account maintenance charges, custodial fees, and portfolio management costs sit under a federal suspension of miscellaneous itemized deductions that Congress made permanent in 2025. Two meaningful exceptions remain: commissions and other transaction costs adjust your cost basis, and margin interest is still deductible up to your net investment income.
Advisory and Account Fees Are No Longer Deductible
Before 2018, fees paid to financial advisors and portfolio managers could be claimed as miscellaneous itemized deductions on Schedule A, but only the portion above 2% of adjusted gross income counted, and only if you itemized. Many investors never cleared that floor.
The Tax Cuts and Jobs Act of 2017 suspended these deductions entirely starting with the 2018 tax year. That suspension was originally set to expire after 2025. It didn’t. The One Big Beautiful Bill Act, signed into law on July 4, 2025, made the suspension permanent. The statute now bars miscellaneous itemized deductions for any tax year beginning after December 31, 2017, with no expiration.1Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
So advisory fees, custodial fees, financial planning charges, and asset management costs produce no federal deduction, whether you itemize or not. The underlying provision that used to authorize them, Section 212 of the Internal Revenue Code, still exists and still allows deductions for ordinary expenses related to producing income.2Office of the Law Revision Counsel. 26 USC 212 – Expenses for Production of Income But because those expenses are classified as miscellaneous itemized deductions, the permanent suspension blocks the benefit for individuals.
Commissions and Transaction Costs Reduce Your Gain
Transaction costs work differently from ongoing management fees. Commissions, load fees on mutual funds, and similar charges you pay when buying or selling are not treated as current-year expenses. 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 basis is $10,050. Sell it later for $15,000 with another $50 commission, and your net proceeds are $14,950. Your taxable gain is $4,900 rather than $5,000.3Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses
Mutual fund fees follow the same logic. Acquisition charges get added to the basis of your shares; redemption fees reduce your sale price.3Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses If a bank or agent buys shares on your behalf through 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 report basis-adjusted figures on Form 8949 when you sell.4Internal Revenue Service. Instructions for Form 8949 For a long-term holding, the commission you paid this year may not reduce your taxes for a decade.
Margin Interest Is Still Deductible
Interest you pay on money borrowed from your brokerage to invest is generally deductible. This deduction wasn’t affected by the TCJA or the 2025 extension because investment interest expense sits in its own section of the code, separate from the miscellaneous itemized deduction rules.
The limit is important: you can only deduct margin interest up to your net investment income for the year. Net investment income includes dividends, interest, short-term capital gains, and royalties, reduced by any investment expenses. Any excess carries forward to future years.5Office of the Law Revision Counsel. 26 USC 163 – Interest
To claim it, file Form 4952 to calculate the allowable amount, then report the result on Schedule A. You have to itemize, so it only helps if your itemized deductions exceed the standard deduction.6Internal Revenue Service. About Form 4952, Investment Interest Expense Deduction Qualified dividends and long-term capital gains are excluded from investment income by default, though you can elect to include them at the cost of losing the preferential rate on those amounts. Whether that trade helps depends on your bracket and how much interest you’re carrying.
Fees Inside IRAs and 401(k) Plans
Fees charged inside a tax-advantaged account 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 deduct the cost of maintaining that benefit on top of it.7Internal Revenue Service. Retirement Topics – Fees
When fees come out of the account balance, they simply reduce what’s there to grow. A fee pulled from a Traditional IRA shrinks the tax-deferred pool. A fee pulled from a Roth IRA permanently reduces dollars that would have come out tax-free. Neither generates a deduction.
Before the TCJA, paying IRA administrative fees out of pocket rather than from the account could produce a miscellaneous itemized deduction. That path is closed. Paying Roth IRA fees from outside the account still makes sense to preserve tax-free compounding, but it no longer produces any deduction. And only fees tied to managing the investments inside the account should be paid from the IRA; billing unrelated financial planning or tax preparation fees to the IRA risks being treated as a taxable distribution or a prohibited transaction.
Trusts and Estates Get a Narrow Carve-Out
Non-grantor trusts and estates file on Form 1041 and face the same suspension of miscellaneous itemized deductions.8Internal Revenue Service. About Form 1041, U.S. Income Tax Return for Estates and Trusts A separate provision, however, lets them deduct administration costs that would not have been incurred if the property were held outside a trust or estate, and those are treated as above-the-line deductions rather than miscellaneous itemized ones.1Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
Trustee compensation, fiduciary return preparation, probate costs, and trust-related legal fees typically qualify. Standard investment advisory fees generally do not, because the Supreme Court held in Knight v. Commissioner that they are the kind of expense an individual investor would also incur.9Justia. Knight v. Commissioner, 552 U.S. 181 (2008) Treasury regulations allow a narrow exception: if an advisor charges an additional fee specifically because the account is a trust, that incremental amount can qualify. The standard advisory fee itself cannot.10GovInfo. 26 CFR 1.67-4 – Costs Paid or Incurred by Estates or Non-Grantor Trusts
What to Do When Fees No Longer Reduce Your Taxes
With the deduction gone, every basis point in fees now comes straight out of your after-tax return. The most direct response is to lower the fees themselves. Moving from an actively managed fund charging 1% or more to a low-cost index fund saves real money that no longer had a tax offset anyway.
Where you pay from matters too. If you have both taxable and Roth accounts under the same advisor, billing the advisory fee to the taxable account preserves the Roth’s tax-free compounding. The pre-2018 logic of paying from the IRA to capture a deduction no longer applies.
For active traders, commissions and transaction fees still reduce your tax bill through the cost basis mechanism, so keeping accurate lot-level records is worth the effort, particularly for shares acquired through dividend reinvestment or automatic investment plans.
And if you pay margin interest and have investment income, don’t leave the Form 4952 deduction on the table. It’s the one brokerage-related write-off individual investors still have, and brokerages don’t always flag it on year-end tax documents.