October 2026
What Business Owners Need to Know
If you pay someone to manage your investments, you have probably wondered whether you can write that fee off. For most people, you can’t. A few situations still let advisory fees lower your tax bill, though, and business owners have more options than most. This post covers what counts, what doesn’t, and how to make sure you aren’t missing anything.
Before 2018, you could deduct investment advisory fees if you itemized, but only the amount above 2% of your income. For a lot of households, that added up to little or nothing.
The Tax Cuts and Jobs Act switched that deduction off from 2018 through 2025. It was set to return in 2026, until the One Big Beautiful Bill Act, passed in July 2025, made the change permanent.
Are investment advisory fees tax deductible now?
Are advisory fees tax deductible for a trust?
Partly. A trust can deduct the costs of running the trust, such as trustee fees, legal fees, and the cost of preparing its tax return (Form 1041).
Investment advisory fees work differently. A trust can only deduct the part of the fee charged specifically because the account is a trust. Since most advisors charge trusts the same fee they charge individuals, there is often no additional trust-related fee to deduct. If you have a revocable living trust, the IRS treats those assets as yours, so the personal rules apply.
Estates
Estates follow the same pattern. Executor fees, legal fees for settling the estate, and preparing the estate’s tax return are deductible. Investment advisory fees generally are not.
Rental property
If you own rental property, fees for managing it go on Schedule E and reduce your rental income. However, only the fees related to the rental property qualify for this treatment. Advice about your stocks and retirement savings is still considered personal.
Traditional IRAs
There’s no deduction here, but you can get a similar result. If your advisor manages a traditional IRA, you can have the fee paid straight from the IRA. That money hasn’t been taxed yet, so you’re covering the fee with pre-tax dollars.
Two things to watch. The IRA can only pay its own fees, never fees for your other accounts. And for a Roth IRA, it can make more sense to pay the fee from another account so your tax-free money keeps growing.
Are financial advisory fees tax deductible for a business? Yes, as long as the advice is for the business. Common examples include:
Watch out for these
Your business paying your personal advisor. The fee doesn’t become deductible because the company paid it. The IRS looks at what the advice was for.
Investments held in an S corporation or partnership. If your business holds a stock portfolio on the side, the fees for managing it pass through to your personal return, where they can’t be deducted.
Buying or selling a business. Advisory fees related to acquiring or selling a business usually are not immediately deductible. Instead, they are often added to the cost of the deal or used to offset the sale proceeds, which affects your taxes over time. Because the rules are complex and depend on how the transaction is structured, talk with your CPA before closing.
Ask for separate invoices. If one advisor handles both your business and your personal money, have them bill each one separately.
Pay from the right account. Business fees come from the business account, trust fees from the trust, and IRA fees from the IRA they belong to.
Keep the engagement letter. It shows what the advisor was hired to do, which is the first thing the IRS would ask.
Put it on the right form. Sole proprietors use Schedule C (legal and professional services). S corporations and partnerships use their business return. Rental fees go on Schedule E, and trust or estate costs go on Form 1041.
Hold onto your records. Keep invoices and proof of payment for at least three years after you file.
Can I deduct advisory fees on my taxes?
Not if the fee is for managing your personal investments. Fees for business advice, rental property, or running a trust or estate may still qualify.
Are tax preparation fees deductible?
The personal part isn’t. If your return includes a Schedule C, E, or F, the share of the prep fee for that schedule can be deducted there. A business can deduct the cost of preparing its own return.
Are trading commissions different from advisory fees?
Yes. Commissions on buying or selling an investment are built into your cost or your sale price, which lowers your taxable gain. A percentage-of-assets advisory fee doesn’t get that treatment.
Will the deduction come back?
Only if Congress passes a new law. The 2025 change has no end date.
Advisory fees aren’t always easy to sort out on your own, especially when one advisor handles your business, your personal accounts, and maybe a family trust. If you’re not sure which of your fees can be deducted, give us a call. Our team in Baxter, Pequot Lakes, and Aitkin can look over your invoices and statements, tell you what qualifies, and make sure it ends up in the right place on your return.
Contact Lakes Area CPA Today to set up a time to talk.
This article provides general information about federal and Minnesota tax law as of October 2026 and is not tax advice for your specific situation. Consult a CPA before making decisions based on this information.
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