Most bank account fees are not tax deductible for personal accounts
If you pay a monthly maintenance fee, overdraft fee, or ATM fee on a personal checking or savings account, you cannot deduct it on your tax return. The IRS does not allow deductions for fees on accounts used for personal, family, or household purposes. This applies whether you pay the fee once or every month.
The rule is different if the account is tied to a business or investment activity. A business checking account fee, a fee on an investment brokerage account, or a fee charged to manage rental property funds may be deductible—but only if you itemize deductions and meet other conditions. Most people take the standard deduction instead, which makes the deduction worthless even if it technically exists.
Key Takeaways
- Bank fees on personal accounts—maintenance, overdraft, ATM charges—are never tax deductible, even if you pay them every month.
- Fees on business accounts, investment accounts, or accounts used to manage rental income may be deductible only if you itemize deductions instead of taking the standard deduction.
- You must have a clear business or investment purpose for the account; using a personal account for occasional side work does not make the fees deductible.
- Keeping receipts for business account fees matters only if you itemize, which fewer than one in three taxpayers do.
When business account fees might be deductible
If you own a sole proprietorship or freelance business and pay a fee on a dedicated business checking account, that fee may be deductible as a business expense. The account must be used exclusively for business income and expenses, not mixed with personal money. The same applies to fees on a business savings account or a business money market account.
To claim the deduction, you must file Schedule C (Profit or Loss from Business) with your tax return and itemize deductions rather than take the standard deduction. Most individual filers take the standard deduction because it is larger than the sum of their itemized deductions. If you take the standard deduction, business account fees do not reduce your taxable income, even though they are technically deductible.
Self-employed people and small business owners should track business account fees separately from personal account fees. Keep bank statements or receipts showing the fee amount and the date. If you are audited, the IRS will want to see that the account was genuinely used for business.
Investment account fees and brokerage charges
Fees paid to a brokerage firm, investment advisor, or custodian for managing an investment account were historically deductible as miscellaneous itemized deductions. However, the Tax Cuts and Jobs Act of 2017 suspended this deduction for tax years 2018 through 2025. Even if you itemize, you cannot deduct investment advisory fees, brokerage fees, or custodian fees during this period.
This suspension applies to fees you pay directly to the investment firm. It does not affect fees that are already built into mutual fund expense ratios or ETF costs, which reduce your return but are not separately deductible anyway. After 2025, the deduction may return, but that depends on whether Congress extends the suspension.
Rental property account fees
If you own rental property and maintain a separate bank account for rental income and expenses, fees on that account may be deductible as a rental expense. You report rental income and expenses on Schedule E (Supplemental Income and Loss). Account fees count as a rental expense if the account is used only for that property.
Like business account fees, rental account fees are deductible only if you itemize deductions. You must keep records showing the account was used for the rental property and not for personal purposes. If you own multiple properties, a single account that mixes income and expenses from different properties is still deductible, but mixing rental and personal money disqualifies the fee.
Why most people cannot use this deduction
The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. To benefit from deducting business or rental account fees, your total itemized deductions—including mortgage interest, property taxes, charitable donations, and account fees—must exceed the standard deduction. For most households, they do not.
If your itemized deductions total $20,000 and the standard deduction is $29,200, you take the standard deduction and ignore the itemized deductions entirely. The $50 in business account fees you paid that year does not reduce your taxes at all. This is why many small business owners do not bother tracking account fees for tax purposes.
You can use tax software or a spreadsheet to estimate your total itemized deductions before the end of the year. If you are close to the standard deduction threshold, paying attention to business account fees might push you over it. If you are far below it, the fees do not matter for taxes.
How to track and report deductible account fees
If you have a business or rental account and you itemize deductions, download your bank statements for the year and identify all fees. Most banks list fees separately on the statement or in a year-end summary. Add them to your other business or rental expenses when you prepare your tax return.
On Schedule C (for business), account fees go in the "Office Expense" or "Other Expenses" section. On Schedule E (for rental), they go in the "Expenses" section under "Other." Do not mix business account fees with personal account fees; only the business or rental fees are deductible.
Keep your bank statements for at least three years in case the IRS audits your return. A statement showing the fee, the date, and the account name is sufficient proof. You do not need to file receipts with your tax return, but you must have them if asked.
Frequently Asked Questions
Can I deduct ATM fees if I use the ATM for business?
No. ATM fees on a personal account are not deductible, even if you withdraw cash for a business purpose. The account itself must be a business account, not a personal account used occasionally for business. If you have a dedicated business checking account and pay ATM fees on that account, those fees may be deductible if you itemize.
What about wire transfer fees or overdraft fees on a business account?
Wire transfer fees, overdraft fees, and other transaction fees on a business account are treated the same as monthly maintenance fees. They are deductible business expenses if you itemize deductions. Keep your bank statements to document them.
If I use a personal account for freelance work, can I deduct the account fees?
No. The account must be a business account, not a personal account used for side work. Opening a separate business checking account is inexpensive and makes the fees deductible. Many banks offer free or low-cost business accounts for sole proprietors.
Do I need to report account fees separately on my tax return?
No. You add account fees to your other business or rental expenses and report the total. The IRS does not require you to itemize each fee. A single line item for "Office Expenses" or "Other Expenses" that includes account fees is acceptable.
What happens if I close a business account mid-year?
You can still deduct the fees you paid while the account was open. The account does not have to be open at the end of the year. Keep the statements from the months you had the account to document the fees.