Are Stock Transaction Fees Tax Deductible? 2026 Rules

Last updated: September 27, 2026 · By the Flex Tax and Consulting Group team

Are stock transaction fees tax deductible? Short answer: no, you can’t deduct stock transaction fees or trading commissions as a separate expense. However, they still lower your tax. When you buy a stock, you add the fees to your cost basis. When you sell, you subtract the fees from your sale proceeds. Either way, your taxable gain gets smaller, or your deductible loss gets bigger.

Below, we explain how this works in 2026. We also explain why most other investment expenses are no longer deductible at all.

Key takeaways

Buy-side commissions and fees increase your cost basis.
Sell-side commissions and fees reduce your amount realized (sale proceeds).
Most brokers already include these fees in the basis and proceeds on Form 1099-B. So don’t count them twice.
Advisory fees, newsletters and safe deposit boxes used to be miscellaneous itemized deductions. However, the 2025 tax law (Public Law 119-21) made their elimination permanent.
Investment interest, such as margin interest, can still be deductible if you itemize. You figure it on Form 4952.

How stock transaction fees reduce your gain

The IRS treats commissions and similar fees as part of the cost of buying or selling an investment. In other words, they are not a deduction on their own. In fact, IRS Publication 550 lists commissions as an adjustment to basis for stocks and bonds.

Example: You buy 100 shares at $10 and pay a $10 fee. As a result, your cost basis is $1,010, not $1,000. Later, you sell the shares for $15 each ($1,500) and pay another $10 fee. So your amount realized is $1,490. Therefore, your capital gain is $1,490 − $1,010 = $480, not $500.

Many brokers now charge $0 commissions on stock trades. Even so, you may still see small regulatory fees on sales, such as SEC Section 31 fees. You may also pay fees on options, mutual fund trades or foreign transactions. The same basis and proceeds rules apply to all of these.

Check your Form 1099-B before you adjust anything

For most “covered” securities, your broker reports your basis and proceeds to the IRS on Form 1099-B. Usually, those figures already reflect commissions and fees. If you add the fees again on Form 8949, you would understate your gain.

So adjust only in two cases. First, when the 1099-B leaves out a fee you actually paid. Second, when your broker doesn’t report basis, as with older “noncovered” shares. In either case, keep records to support the change.

What about other investment expenses?

Before 2018, investors could deduct certain costs of producing investment income. These included advisory fees, financial publications and safe deposit box rent. They counted as miscellaneous itemized deductions above 2% of adjusted gross income.

Then the 2017 tax law suspended that deduction for 2018 through 2025. Later, the 2025 federal tax law made the elimination permanent. As a result, you can’t deduct these expenses for 2026 and later years.

A few related items work differently:

Investment interest. You may deduct margin interest and similar costs as an itemized deduction, up to your net investment income. You figure it on Form 4952, and any excess can carry forward.
Trader tax status. Traders who meet IRS standards may deduct business expenses on Schedule C. However, the bar is high. Trading must be substantial, frequent and continuous. Being an active investor is not enough.
Retirement accounts. Generally, you can’t deduct fees paid inside a retirement account, because the account itself already gets tax benefits.

California rules for stock transaction fees

California taxes capital gains as ordinary income. For that reason, figuring your basis correctly matters on your state return too. In general, California follows the same basis rules for commissions and fees.

However, California did not adopt the federal suspension of miscellaneous itemized deductions. So you may still claim certain investment expenses on your California return (Schedule CA (540)). Check the current FTB instructions for the year you’re filing.

FAQ

Are brokerage fees tax deductible in 2026?

Not as a separate deduction. Instead, you add buy-side fees to the stock’s basis and subtract sell-side fees from the proceeds. As a result, your taxable gain is lower.

Can I deduct investment advisory fees?

Not on your federal return. They were miscellaneous itemized deductions, and the 2025 tax law permanently eliminated that deduction. However, California may treat them differently.

Is margin interest deductible?

It can be. Investment interest is an itemized deduction, limited to your net investment income. You figure it on Form 4952.

Do I need to add fees to my basis myself?

Usually not. Most brokers already include commissions and fees in the basis and proceeds on Form 1099-B. So adjust only if a fee is missing, and keep documentation.

Sources

Last reviewed September 27, 2026.

Want your investment reporting reviewed before tax season?

Book a Tax Strategy Session

This article provides general information only and is not tax or legal advice. Tax outcomes depend on individual facts and circumstances. Contact us about your specific situation.