For years, investors could deduct many costs associated with managing their portfolio. However, the Tax Cuts and Jobs Act (TCJA) of 2017 dramatically changed the rules for most individual investors.

The ability to deduct investment expenses now depends heavily on your status: are you a regular investor or a full-time trader? For the average person, the short answer is that most investment expenses are no longer deductible.

The Rule Change That Eliminated Most Deductions

Before 2018, you could deduct investment expenses (like financial advisor fees, brokerage fees, and investment research subscriptions) as "miscellaneous itemized deductions."

  • The TCJA Change: The TCJA temporarily suspended (from 2018 through 2025) all miscellaneous itemized deductions subject to the 2% floor.2 This change eliminated the deduction for investment expenses for most individual investors.
  • The Status Quo (2025): The deduction remains suspended. You cannot deduct:
    • Financial Advisor Fees (fees paid for investment advice or management).
    • Investment Software or Subscriptions (e.g., Bloomberg terminal access, specialized charting software).
    • Investment Seminars, Classes, or Travel related to your portfolio.
    • Safe Deposit Box Rentals (used for storing investment documents).

What You CAN Still Deduct or Use

While you can't take an itemized deduction for management fees, certain investment-related costs remain deductible or are treated differently.

1. Business Expenses for Full-Time Traders

If you qualify as a "Trader" (not just an investor), you can deduct business expenses on Schedule C (Profit or Loss From Business), just like any other business.

  • The Bar is High: To qualify as a trader, your activity must be substantial and you must seek to profit from daily market movements rather than long-term appreciation. This status is rarely granted to part-time or casual investors.
  • Deductible Costs: If you qualify, you can deduct software, computers, office supplies, and even home office expenses related to trading.

2. Investment Interest Expense

If you borrow money to buy securities (e.g., a margin loan from your broker), the interest paid on that loan may be deductible as an itemized deduction.

  • The Limit: You can only deduct investment interest expense up to the amount of your net investment income (interest, non-qualified dividends, short-term capital gains, etc.).
  • Documentation: Your broker provides Form 1099-INT detailing the margin interest you paid.

If you invest through an entity that is not subject to the TCJA changes (e.g., certain partnerships, estates, or trusts), those entities may still be able to deduct investment-related fees on their tax returns.

4. Direct Trading Costs (The Most Common)

Costs that are directly tied to the acquisition or disposition of an asset are handled immediately, not as a later deduction:

  • Commissions: Commissions and transaction fees (if applicable) are added to the asset's cost basis (the price you paid). This reduces your future capital gain when you eventually sell, saving you tax then.
  • Example: You buy a stock for $100 and pay a $5 commission. Your cost basis is $105. If you sell it for $110, your taxable gain is only $5 ($110 - $105).

Conclusion: Focus on Cost Basis

For the average individual investor, the best strategy for tax efficiency today is to ignore the deduction of management fees and instead focus on lowering your brokerage expenses and accurately tracking your cost basis for every trade. Since commissions directly reduce your eventual taxable gain, ensuring your broker or tax software correctly tracks this figure (often on Form 1099-B) is the most practical way to save money on taxes related to investment activity.