Are investment advisory fees deductible in New York?
Generally, New York does not allow investment advisory fees as a deduction against an individual taxpayer's federal adjusted gross income under current tax laws. This is because the Tax Cuts and Jobs Act of 2017 took away the itemized deduction for miscellaneous expenses subject to the 2% of AGI floor. Among those falling under this category are investment advisory fees, financial planning, and portfolio management services; hence, such expenses are not deductible on federal tax returns through 2025.
In New York, the state tax laws follow federal provisions in this respect for individual taxpayers. Because of this fact, investment advisory fees generally are not deductible on state income tax returns. However, there might be exceptions such as for businesses or trusts that may deduct the advisory fees as an ordinary and necessary expense of a trade or business. Furthermore, where such expenses are related to tax-exempt income, certain adjustments may be required.
Further assistance from tax professionals will help ascertain how those rules apply to unique financial situations and help pinpoint any potential strategies there may be to control investment expenses within the letter of the law.
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