Checking account fees are not tax deductible for most people

The short answer: no. The IRS does not allow you to deduct checking account fees, overdraft fees, or monthly maintenance charges on your personal tax return. These are personal banking expenses, not business or investment expenses, and the tax code does not treat them as deductible.

This changed in 2017 when the Tax Cuts and Jobs Act eliminated the deduction for miscellaneous itemized deductions—the category where banking fees used to live. Even if you itemize deductions instead of taking the standard deduction, you cannot write off what you pay your bank.

The one exception is narrow: if you have a business checking account and the fees are tied directly to running that business, you may be able to deduct them as a business expense. But personal checking fees—even if you use the account to manage household finances—do not may have access to.

Key Takeaways

  • Personal checking account fees cannot be deducted on your federal tax return, whether you itemize or take the standard deduction.
  • Business checking account fees may be deductible if you are self-employed or own a business, but only if the account is used for business purposes.
  • Overdraft fees, monthly maintenance fees, and ATM fees all fall into the non-deductible category for personal accounts.
  • The deduction for miscellaneous itemized deductions was eliminated in 2017 and is not scheduled to return unless Congress changes the tax code.

When a business checking account fee might be deductible

If you are self-employed or own a business, fees on a business checking account are treated differently. The IRS allows you to deduct ordinary and necessary business expenses, and that includes banking fees directly tied to your business operations.

To claim the deduction, the account must be genuinely separate from your personal finances and used only for business. You will need to report the expense on Schedule C (if you are a sole proprietor) or on your business tax return. Keep your bank statements and any fee documentation as proof.

This applies to sole proprietors, partnerships, and S-corporations. If you run a business but use a personal checking account for both business and personal transactions, the IRS may not allow you to deduct the fees because the account is not exclusively for business use.

What the IRS considers a personal banking expense

The IRS classifies checking account fees as personal expenses because they are costs of managing your own money, not costs of earning income or running a business. This includes overdraft fees, monthly service charges, minimum balance fees, wire transfer fees, and ATM fees charged by your bank.

Even if you use your checking account to receive income from a job or to pay bills, those fees are still personal. The fact that money moves through the account does not make the banking fees deductible—the account itself is a personal financial tool, not a business asset.

The same rule applies to savings accounts, money market accounts, and certificates of deposit. Any fees you pay to maintain or use these accounts cannot be deducted on your personal return.

How the 2017 tax law change affected banking fees

Before 2017, people who itemized deductions could claim miscellaneous itemized deductions—a catch-all category that included banking fees, tax preparation costs, and other small expenses. You had to deduct only the amount that exceeded 2 percent of your adjusted gross income, but the deduction was available.

The Tax Cuts and Jobs Act suspended this deduction for tax years 2018 through 2025. Unless Congress extends or reinstates it, the deduction will disappear entirely after 2025. For now, there is no way to deduct personal banking fees.

This change affected millions of people who used to itemize. Even those who still itemize deductions (because mortgage interest, property taxes, or charitable donations are high enough) cannot deduct banking fees anymore.

Strategies to reduce what you pay in banking fees

Since you cannot deduct the fees, the best approach is to avoid them in the first place. Many banks offer checking accounts with no monthly fee if you meet certain conditions: direct deposit, a minimum balance, or a certain number of debit card transactions per month.

Online banks typically charge lower or no monthly fees because they have fewer physical branches. Credit unions often have lower fee structures than large national banks. Comparing accounts before you open one can save you $100 to $200 per year—money you keep instead of paying to the bank.

If you already have an account with fees, call your bank and ask whether you may have access to for a fee waiver or a lower-fee account tier. Many banks will waive fees for customers who maintain a relationship or meet income thresholds.

Documentation you should keep if you have a business account

If you own a business and want to deduct checking account fees, keep your monthly bank statements and any fee schedules from your bank. The IRS may ask for proof that the account is used for business purposes only, so maintain clear records of deposits and withdrawals.

If your account has both business and personal transactions, document which portion of the fees relates to business use. For example, if you use the account 80 percent for business and 20 percent for personal, you could deduct 80 percent of the fees—but you need records to support that split.

Save your tax return and Schedule C for at least three years after you file. The IRS has a three-year window to audit most returns, and having your documentation ready makes the process faster if questions come up.

Frequently Asked Questions

Can I deduct overdraft fees if I use my account for work?

No. Overdraft fees on a personal account are not deductible, even if you use the account to receive paychecks or manage work-related expenses. The account itself is personal, so all fees tied to it are personal expenses. Only fees on a business checking account used exclusively for business can be deducted.

What if my employer reimburses me for banking fees?

If your employer reimburses you, the reimbursement is not taxable income to you, and you do not need to deduct the fee. You straightforward report the reimbursement as a wash—no income, no deduction. Keep the receipt and your employer's reimbursement documentation for your records.

Are investment account fees deductible?

Investment account fees—such as brokerage fees or advisory fees—are also not deductible for most people. The 2017 tax law change eliminated the deduction for investment-related expenses as well. Some professional investors may have different rules, but for typical individuals, these fees cannot be deducted.

Can I deduct fees if I itemize deductions?

No. Even if you itemize deductions instead of taking the standard deduction, banking fees are not deductible. The miscellaneous itemized deduction category that once included these fees was suspended in 2017 and remains unavailable through 2025.

What if I use my checking account for a side business?

If you use a personal checking account for a side business, the fees are still not deductible because the account is not exclusively for business. To deduct banking fees, you need a separate business checking account used only for that business. Once you open a business account, fees on that account become deductible.