Many people ask their advisors the same question every year: Are financial advisor fees tax-deductible? It’s a fair question, especially when you’re paying for professional guidance on your portfolio, retirement planning, or taxes.

With changing tax laws and personal financial goals, it’s natural to want clarity on how these fees affect your annual filing. At Heritage Wealth Retirement Planning, we often help clients in Naperville and beyond understand how professional fees fit into a broader tax strategy. 

If you’d like to discuss your own situation, you can always reach us at (630) 868-9127 for a friendly, informative conversation about tax-efficient planning.

Understanding the Current Rules: Are Financial Advisor Fees Tax-Deductible?

Before 2018, many taxpayers could deduct financial advisor or investment management fees as “miscellaneous itemized deductions.” That meant if your total qualifying expenses exceeded 2% of your adjusted gross income (AGI), you could deduct the amount beyond that threshold.

However, under the Tax Cuts and Jobs Act (TCJA), those deductions were suspended through 2025. This change removed a popular benefit for individuals who paid significant advisory or investment management fees.

In short, for most individuals, financial advisor fees are currently not tax-deductible. But that doesn’t mean there are no exceptions or workarounds worth exploring.

The Straightforward Answer

While the broad answer is no, there are specific cases in which certain fees may qualify for deductions or indirect tax advantages. For example, fees tied to a business or tax-related service might still be deductible under other IRS rules.

If your advisor provides tax or business planning for your company, those costs may fall under ordinary and necessary business expenses. Similarly, fees paid through tax-deferred retirement accounts, such as IRAs or 401(k)s, may have tax implications depending on how they’re paid.

For example:

• Business owners may be able to deduct advisory fees related to company finances.

• Trustees can sometimes deduct investment management fees from a trust’s income tax return.

• Tax-exempt accounts may indirectly reduce taxable income since growth and withdrawals are treated differently. 

Each case depends on how the account is structured and who benefits from the service. That’s why consulting a fiduciary like Heritage Wealth Retirement Planning is valuable for exploring personalized strategies.

Can You Deduct Investment Management Fees in Any Situation?

The question “Can you deduct investment management fees?” often leads to confusion. Under current law, these fees fall into the same suspended category as financial advisor fees. That means they’re not deductible for most individual investors through 2025 unless the law changes.

However, there’s one angle worth considering. If your advisor’s fee is paid from a tax-advantaged account (for instance, a traditional IRA), the payment can effectively reduce the account balance, potentially leading to smaller taxable withdrawals later. 

That’s not technically a deduction, but it can have a similar tax effect.

The IRS Publication 529 provides further details on which miscellaneous expenses can and cannot be deducted. You can review the publication directly through the IRS website.

Can You Write Off Financial Advisor Fees as a Business Expense?

If you’re self-employed or own a business, the rules can work in your favor. Business-related financial advice, such as cash flow planning, employee benefits, or business succession, may qualify as a legitimate deduction.

The IRS allows deductions for “ordinary and necessary” business expenses, which may include professional advice that supports your business operations. 

If you pay an advisor to manage business investments or retirement plans for your employees, those costs could be considered deductible under Schedule C or your corporate tax return.

In this scenario, keeping records of how the fees relate directly to your business activities is essential. Always separate business and personal financial planning fees, since personal expenses are not deductible.

Is a Financial Advisor Fee Tax Deductible for Trusts and Estates?

Trusts and estates follow different tax rules than individuals. Under IRC Section 67(e), certain administrative expenses, like investment management or advisory fees, can still be deducted if they wouldn’t have been incurred without the trust or estate.

For example, if a trust hires a professional advisor to handle complex investment accounts or prepare fiduciary tax returns, those expenses may qualify for a deduction at the trust level. 

This area of tax law can be intricate, so working with both an advisor and an accountant is recommended to make sure deductions are handled correctly.

How to Do Tax Planning Around Non-Deductible Fees

Even though most advisor fees can’t be deducted right now, tax planning doesn’t stop there. Understanding the steps on how to do tax planning effectively means identifying other ways to offset your tax liability. Here are a few strategies to consider:

1. Utilize tax-advantaged accounts – Contribute to traditional IRAs, Roth IRAs, and 401(k)s. These accounts offer tax-deferred or tax-free growth, reducing the need for direct fee deductions.

2. Focus on tax-efficient investments – Choose investments that minimize taxable events, like index funds or municipal bonds.

3. Revisit portfolio structure – Place income-generating assets in tax-advantaged accounts and growth assets in taxable ones for long-term benefits.

4. Consider charitable giving strategies – Donor-advised funds and qualified charitable distributions can reduce taxable income while aligning with personal goals.

5. Review your tax situation annually – Even though fee deductibility rules remain paused, tax laws evolve. Regular reviews with your advisor help you stay proactive.

How Heritage Wealth Retirement Planning Helps Clients

At Heritage Wealth Retirement Planning, tax efficiency is a vital part of financial well-being. Our goal is to help clients understand how advisory fees, retirement accounts, and investment decisions work together in a cohesive plan.

We don’t just talk about taxes once a year. Instead, we integrate tax awareness into every part of your long-term strategy, from account management to retirement income planning. 

That includes identifying opportunities to offset taxable income, minimize unnecessary withdrawals, and structure your investments wisely.

By keeping clients informed about IRS updates and how different types of accounts are treated, we help you make better financial decisions for today and the future. You can explore more about our approach by visiting Heritage Wealth.

Will Financial Advisor Fees Become Deductible Again?

Many industry professionals anticipate potential changes after 2025 when the TCJA provisions are set to expire. If Congress doesn’t renew the suspension, the ability to deduct financial advisor fees might return in some form.

That’s why staying informed matters. A good financial advisor won’t just manage your assets but also monitor how new tax laws affect your net returns. If rules change, you’ll want to be ready to adjust your strategy quickly.

Until then, focus on optimizing what you can control: investment allocation, tax-advantaged savings, and smart planning. Whether or not fees are deductible, those areas often make a bigger impact on your long-term results.

Call (630) 868-9127 today to learn how thoughtful planning today can make your tomorrow more financially confident.