Are stock transaction fees tax deductible?

Are stock transaction fees tax deductible?

As a clear starter: are stock transaction fees tax deductible? For most U.S. individual investors, the short answer is no — brokerage commissions and most transaction fees are not deductible as miscellaneous itemized deductions under current federal law. Instead, commissions and trading fees are capitalized into the cost basis when you buy securities or reduce the amount realized when you sell, affecting your capital gain or loss.

As of 2026-01-17, according to IRS publications and recent tax guidance, the treatment described below reflects current U.S. federal rules (including the suspension of many miscellaneous itemized deductions through tax year 2025). This guide helps you understand the rules, how to report fees, special situations (like trader status or business entities), and recordkeeping best practices. It also notes that cryptocurrency is treated as property by the IRS, so transaction fees for crypto are handled like stock fees.

Short answer

For most individual investors in the United States, brokerage commissions and transaction fees are not currently deductible as miscellaneous itemized deductions; instead they are added to the cost basis of the purchase (or subtracted from sale proceeds) and thus affect capital gain or loss. Put simply: commissions change your basis and amount realized rather than appearing as a standalone deduction on Schedule A.

U.S. federal tax authorities and primary guidance

The IRS provides the primary guidance on investment income and expenses. The most relevant IRS materials are Publication 550 (Investment Income and Expenses) and Publication 529 (Miscellaneous Deductions). These documents explain how investment expenses historically were treated, and how recent statutory changes affect deductions.

Key legislative context: the Tax Cuts and Jobs Act of 2017 suspended miscellaneous itemized deductions subject to the 2% of adjusted gross income (AGI) floor for tax years 2018 through 2025. That suspension means that many investment-related expenses that used to be deductible as miscellaneous itemized deductions (investment advisory fees, custodial fees, tax preparation costs allocable to investment income, and similar expenses) are not deductible on individual returns for those years. Instead, transaction costs related directly to the acquisition or disposition of property are capitalized.

The IRS guidance you should consult for specifics includes Publication 550 and Publication 529, and the instructions for Forms 8949 and Schedule D that show how to report capital gains and losses adjusted for commissions and fees.

How transaction fees are treated for individual investors

Commissions, trading fees and similar costs must be capitalized into the taxpayer’s basis when buying securities and reduce the amount realized when selling, thereby reducing taxable capital gains or increasing deductible losses. That means you don’t report a separate deduction for a commission on Schedule A; instead you increase the cost basis of what you bought (or reduce the sale proceeds when you sell).

For clarity: are stock transaction fees tax deductible in the sense of being an itemized deduction? No. But they do reduce taxable gains or increase losses by altering basis/amount realized.

Adjusting cost basis on purchases

When you buy shares, add purchase commissions and fees to the purchase price to compute cost basis. Basis is generally the amount you paid for the security including any fees that are part of the purchase.

Example framing: if you buy 100 shares at $10.00 each, and you paid a $10 commission, your cost basis equals purchase price plus commission: basis = $1,000 + $10 = $1,010.

Properly tracking basis matters because your taxable gain or loss when you later sell depends on accurate basis calculation.

Adjusting sale proceeds on dispositions

When you sell shares, subtract selling commissions and fees from the gross sale proceeds to determine the amount realized. The amount realized is used to compute your capital gain or loss: taxable gain = amount realized − adjusted basis.

Continuing the example: if you later sell those 100 shares for $15.00 each and pay a $10 selling commission, your amount realized is $1,500 − $10 = $1,490. Your taxable gain would be $1,490 − $1,010 = $480.

This capitalization and reduction approach is the central way transaction fees affect taxes for most investors.

Investment-related expenses that may still be deductible

Some investment-related costs can still be deductible in specific ways, even while many miscellaneous deductions remain suspended. The most important deductible item for many investors is investment interest expense — interest paid on money borrowed to buy taxable investments (for example, margin interest).

Most other investment expenses that were deductible as miscellaneous itemized deductions prior to 2018 remain suspended through 2025. Those include investment advisory fees, custodial fees, subscriptions and tax preparation allocable to investment income for individual taxpayers.

Investment interest expense

Investment interest expense is interest paid on loans used to purchase taxable investments and can be deductible up to your net investment income for the year. For example, margin interest paid on a brokerage margin loan used to buy stocks is commonly treated as investment interest.

Rules and limits:

• Deductible only to the extent of your net investment income (investment income generally includes interest and non-qualified dividends; qualified dividends and capital gains may be treated differently for limitation purposes unless you elect otherwise).
• Unused investment interest expense may be carried forward to future years.
• Investment interest expense deduction is reported on Form 4952 and then carried to Schedule A (itemized deductions).

If you use borrowed funds to buy investments and want to claim investment interest expense, track interest paid and complete Form 4952 when filing.

Special situations and exceptions

There are several circumstances where different tax rules apply and transaction fees might be treated differently.

1. Trader in securities (trader status): A taxpayer who qualifies as a trader in securities under IRS rules may be allowed to treat trading activity as a business. Traders who make this election and who meet IRS standards can use different accounting methods, deduct ordinary and necessary business expenses on Schedule C (including certain trading-related costs), and possibly deduct expenses that are disallowed for typical investors. Determining trader status depends on factors like trading frequency, intent to profit from short-term market movements, and the taxpayer’s businesslike activity. Because trader status has strict and nuanced tests, consult a tax professional before assuming you meet the standard.

2. Business entities: Corporations, partnerships and other business entities follow different capitalization and expense rules. For an entity that buys and sells securities as part of a business, transaction costs may be treated as ordinary business expenses or capitalized according to entity accounting rules and tax regulations. Also, when securities are acquired as part of a corporate acquisition or reorganizations, transaction costs follow corporate tax capitalization rules.

3. Tax-advantaged accounts: Transactions inside tax-advantaged retirement accounts (IRAs, 401(k) plans) do not produce immediate itemized deductions or capital gains/losses on your personal return. Transaction fees charged inside such accounts still reduce the account’s value but are not reported as deductions on your personal tax return. Keep records in case the custodian reports transactions differently.

4. Wash sale rules and transaction expenses: When wash sale rules apply (disallowing certain losses when substantially identical securities are repurchased within 30 days), the disallowed loss amount is added to the basis of the repurchased security; transaction fees still factor into basis calculations and can change the adjusted basis after wash-sale adjustments.

5. Acquisition or business combinations: When securities are acquired as part of an acquisition, merger or purchase of a business, transaction costs can be capitalized and treated according to acquisition cost rules. These situations often require specialized tax accounting.

Treatment for cryptocurrencies and other property

Under current IRS guidance, cryptocurrencies are treated as property for U.S. federal tax purposes. Therefore, transaction fees for buying or selling cryptocurrency are handled like stock transaction fees: fees paid to acquire crypto are added to your cost basis, and fees paid on disposition reduce the amount realized. The same capitalization and amount-realized concepts apply when you calculate capital gains or losses on crypto transactions.

Note: the IRS continues to issue guidance and enforcement actions concerning cryptocurrency. Keep careful records of crypto acquisitions and dispositions, including fees, because brokers and exchanges may report transactions to the IRS via Form 1099-type reporting.

Reporting and recordkeeping

Good recordkeeping is critical. Maintain trade confirmations, broker statements, commission reports, 1099-B forms and any documentation that supports how you calculated basis and amount realized. Brokers increasingly report cost basis on Form 1099-B, but errors and omissions still occur; verify what your broker reports.

Reporting basics:

• Form 8949: Use Form 8949 to report individual capital asset transactions, adjusting for commissions and fees as needed. Broker-reported adjustments will often appear on Form 1099-B and should be reconciled with your own records.
• Schedule D: Totals from Form 8949 flow to Schedule D to compute total capital gains and losses for the tax year.
• Retain documentation: Keep trade confirmations, monthly statements, and a running basis ledger. Proper documentation helps if the IRS questions a transaction’s basis or amount realized.

Check your broker’s cost-basis reporting settings: many brokers can import or set cost basis methods (FIFO, specific identification). When you use specific identification to choose which lots you sold, confirm that the broker’s reporting reflects those elections and keeps accurate records of commissions applied to each lot.

Simple numeric example

A concise example illustrates how commissions affect taxes.

• Purchase: Buy 100 shares at $10.00 = $1,000. You pay a $10 buy commission. Cost basis = $1,000 + $10 = $1,010.
• Sale: Sell 100 shares at $15.00 = $1,500. You pay a $10 sell commission. Amount realized = $1,500 − $10 = $1,490.
• Taxable gain: Amount realized ($1,490) − cost basis ($1,010) = $480 taxable gain.

This shows how purchase and sale commissions are capitalized and subtracted, respectively, rather than claimed as miscellaneous deductions.

Practical tax planning tips

• Keep precise records: Maintain trade confirmations, monthly brokerage statements and Form 1099-Bs. Record commissions and fees alongside each purchase or sale.

• Verify broker reporting: Brokers report cost basis to the IRS; confirm the broker’s numbers match your own records. If you used specific-lot identification, ensure the broker’s 1099-B reflects it.

• Consider investment interest rules: If you borrow money to invest (e.g., margin loans), track margin interest as it may be deductible subject to limitations. File Form 4952 if you claim an investment interest deduction.

• Understand wash-sale effects: If you trigger a wash sale, the disallowed loss is added to the basis of the repurchased asset. Commissions affect that adjusted basis.

• If you trade frequently: Frequent traders who believe they qualify for trader tax status should consult a competent tax advisor before making elections or claiming business deductions. Trader status is fact-intensive and not appropriate for most retail investors.

• For crypto traders: Treat crypto fees like property transaction fees: add fees to basis or subtract from sale proceeds. Because reporting and enforcement are developing, extra care in documentation helps during audit inquiries.

• Watch the law: The suspension of miscellaneous itemized deductions (including many investment expenses) runs through 2025 under current law; rules could change after 2025. If the law changes, deductions for certain investment expenses could be reinstated.

• Get professional help when needed: If you have complex situations (estate events, mergers, business trades, trader status, significant cryptocurrency activity), consult a tax professional to ensure correct treatment and reporting.

Special note on “are stock transaction fees tax deductible” phrasing and usage

This guide repeatedly addresses the question are stock transaction fees tax deductible to emphasize the practical point: commissions and transaction fees are not deductible as miscellaneous itemized deductions for most individual investors through tax year 2025; they affect taxable gain or loss by being capitalized into basis or deducted from sale proceeds.

If your question is whether are stock transaction fees tax deductible in the context of a trading business, corporate activity, or a tax-advantaged account, the answer can differ — business or entity rules and retirement-account rules override the retail investor treatment described above.

Common questions (FAQ)

Q: Can I deduct trading commissions on Schedule A? A: Not under current law for most individual investors. Commissions are capitalized into basis or reduce amount realized, not claimed as miscellaneous itemized deductions (suspended through 2025).

Q: Do broker fees inside an IRA affect my taxes? A: Fees charged inside IRAs generally affect the account’s balance but are not deductible on your personal return. They are not reported as itemized deductions.

Q: If my broker gave me free trades or rebates, how is that treated? A: Broker credits or rebates reduce the net price you paid (or increase net sale proceeds) and should be reflected in your basis/amount realized. Ensure the broker reports correctly on Form 1099-B and your own records reflect the net amounts.

Q: If I pay advisory fees to a financial advisor, can I deduct them? A: Not as a miscellaneous itemized deduction for most individual investors through 2025. Advisory fees used to be deductible as miscellaneous itemized deductions subject to 2% of AGI; that deduction is suspended per current law.

Q: How do I handle commissions for lot-level basis tracking? A: When you buy multiple lots at different prices, allocate the commission to the specific lot cost when you acquire it. Accurate lot-level allocation helps when you sell specific lots and claim specific identification for tax reporting.

See also / related topics

• IRS Publication 550 — Investment Income and Expenses
• IRS Publication 529 — Miscellaneous Deductions
• Form 8949 and Schedule D instructions (capital gains and losses)
• Investment interest expense rules and Form 4952
• Trader vs. investor tax status guidance
• U.S. cryptocurrency tax guidance (IRS Notice and other publications)

References

• IRS Publication 550, Investment Income and Expenses (primary federal guidance)
• IRS Publication 529, Miscellaneous Deductions
• IRS Form 8949 and Schedule D instructions
• IRS Form 4952 instructions (investment interest expense)
• Tax Cuts and Jobs Act (2017) — suspension of miscellaneous itemized deductions subject to 2% floor through 2025 (statutory context)
• Practitioner guidance and tax help resources (e.g., TurboTax, Charles Schwab educational pages) — for practitioner-oriented explanations of basis and commission treatment

As of 2026-01-17, these IRS publications and statutory provisions reflect the prevailing rules; consult the latest IRS releases for updates.

Further exploration and next steps

If you want practical tools to track trades, commissions and cost basis, consider using a brokerage that provides clear cost-basis reporting and exportable trade confirmations. For crypto and multi-asset activity, Bitget provides tools for trading and portfolio monitoring and Bitget Wallet offers custody options; check product features and reporting capabilities to support tax recordkeeping.

If you frequently trade, have large positions, or operate as a trading business, consult a qualified tax advisor to evaluate whether trader status or different accounting methods apply to you. Rules are fact-intensive and errors can be costly.

Explore more Bitget services and Bitget Wallet for trade tracking and wallet management to keep your transaction records organized for tax reporting and compliance.