Are Investment Fees Deductible in 2026?

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The short federal answer is usually no for an individual investor paying portfolio-management, financial-advisory, custodial, or similar fees in 2026. The label on a charge is not conclusive, however, because federal law treats personal investment expenses, investment interest, business expenses, transaction costs, and estate or trust expenses under different provisions.

The former § 67(g) suspension now continues under § 67(h)

Investment-management fees incurred to produce taxable investment income can fit the general description in Internal Revenue Code § 212. For an individual, those expenses historically fell among miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income floor in § 67.

The Tax Cuts and Jobs Act added § 67(g), which disallowed miscellaneous itemized deductions for tax years beginning after December 31, 2017, and before January 1, 2026. Public Law 119-21, enacted July 4, 2025, struck the ending date and later redesignated the amended provision, so current § 67(h) disallows those deductions for every tax year beginning after December 31, 2017.

That 2025 amendment matters because older explanations may say the suspension was scheduled to expire after 2025. As the Code stands in August 2026, ordinary personal investment-advisory fees have not returned as federal Schedule A deductions.

Investment interest remains a separate deduction

Interest paid on money borrowed to acquire or carry investment property is governed by § 163(d), not by the miscellaneous-itemized-deduction rule for advisory fees. The annual deduction generally cannot exceed net investment income, and disallowed investment interest can carry forward to a later tax year.

For an individual investor, deductible investment interest normally requires itemizing and may require Form 4952. Qualified dividends and net capital gain generally are excluded from net investment income unless the taxpayer makes the statutory election to include them, which can affect the preferential tax treatment of that income.

Investment interest also cannot be deducted when it is allocable to tax-exempt income. These limitations make investment interest different from a blanket write-off of an advisory firm’s percentage-of-assets fee.

TheFirstFile’s overview of the mortgage interest deduction discusses another category of interest with its own requirements, while the general tax deductions guide provides broader context.

Trading as a business is not the same as investing

Section 162 allows ordinary and necessary expenses paid or incurred in carrying on a trade or business. IRS guidance distinguishes a securities trader whose activity rises to the level of a trade or business from an investor who buys and holds securities for income or long-term appreciation.

When the activity is a trading business, qualifying trading expenses may be reported as business expenses rather than personal investment expenses. Commissions and other costs of acquiring or disposing of securities generally are not currently deducted as operating expenses; they are taken into account in basis or the amount realized under the applicable transaction rules.

Calling an account “active” or making many trades does not by itself establish trade-or-business status. The classification depends on the nature, frequency, continuity, and purpose of the activity under federal tax law.

A related explanation of ordinary and necessary costs appears in what can be written off as a business expense.

Some charges affect basis instead of creating a deduction

Brokerage commissions, mutual-fund loads, and acquisition fees ordinarily are not standalone deductions. Purchase costs generally increase the tax basis of the investment, while selling costs generally reduce the amount realized on sale.

This timing distinction can matter later when gain or loss is calculated, even though there is no current deduction for the fee.

Estates and trusts have a narrower special rule

Section 67(e) treats certain estate and non-grantor-trust administration costs as deductions in arriving at adjusted gross income when the costs would not have been incurred if the property were not held in the estate or trust. Treasury regulations preserve that treatment for qualifying costs notwithstanding the miscellaneous-itemized-deduction disallowance.

The exception does not make every trust investment fee deductible. Costs commonly or customarily incurred by an individual property owner do not satisfy the special § 67(e) test merely because a fiduciary pays them, and a bundled fiduciary fee may need to be allocated among components with different tax treatment.

Federal and state answers can differ

This article describes the federal income-tax classification in effect on August 9, 2026. State income-tax treatment is a separate question, and the federal disallowance alone does not establish the result on a state return.

The key federal question is therefore what the charge represents. A personal advisory fee, borrowing cost, trading-business expense, transaction cost, and fiduciary administration cost may sound related to investing, but each follows a different tax path.

Sources

• Tax Cuts and Jobs Act, Public Law 115-97, § 11045
• U.S. Code: 26 U.S.C. § 67, miscellaneous itemized deductions
• Public Law 119-21, § 70110, termination of miscellaneous itemized deductions
• U.S. Code: 26 U.S.C. § 212, expenses for production of income
• U.S. Code: 26 U.S.C. § 163(d), investment interest
• U.S. Code: 26 U.S.C. § 162, trade or business expenses
• Internal Revenue Service: Publication 550, Investment Income and Expenses
• Treasury and IRS final regulations on estate and trust deductions under § 67(e)