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- Are processing fees tax deductible? (Short answer)
- Understanding your credit card processing fees
- What is a tax deduction?
- Which payment processing fees are tax deductible?
- IRS rules: When are credit card processing fees tax deductible?
- How to write off payment processing fees
- Save more — and track more — with Sekure
- FAQs about tax-deductible processing fees
Credit card fees can feel complicated — and taxes often make them even more confusing. The good news? Understanding how to deduct fees can help you reduce your taxable income, lower your overall business expenses, and improve profitability.
This guide breaks down which processing fees are tax deductible, how to track them, and the most common mistakes business owners make during tax season. If you’ve ever wondered, “are processing fees tax deductible?”, the short answer is yes — with a few rules to follow.
Are processing fees tax deductible? (Short answer)
Yes. In most cases, payment processing fees, credit card fees, and merchant services fees are tax deductible because they are considered ordinary and necessary business expenses.
This includes fees charged by companies like Stripe, Square, PayPal, Shopify Payments, merchant service providers, and traditional processors. For small businesses asking are credit card processing fees tax deductible, the answer is also yes when the expenses are strictly business-related.
Understanding your credit card processing fees
Before you can deduct these expenses, it helps to understand what you’re being charged for. The term credit card processing fees is often used as a catch‑all, but it includes multiple fee types with different purposes.
Common payment processing fees you may be paying
Your exact costs vary based on:
- Whether transactions are online or in‑person
- The card type used (credit, debit, rewards, corporate, etc.)
- The size and type of your business
- Your processor’s pricing structure
What is a tax deduction?
The Internal Revenue Service (IRS) defines “tax deduction” as an amount of money you can deduct from your taxable gross income to reduce the amount of income you’re taxed on.
For businesses, eligible deductions help improve your bottom line by lowering taxable revenue and maximizing business expenses tax deductions.
Which payment processing fees are tax deductible?
Almost all credit card and payment processing fees are deductible, including:
- Flat‑rate fees
- Processor markups
- Chargeback fees
- Batch fees
- POS software fees
- Payment gateway fees
- PCI compliance fees
- Statement fees
- Authorization and per‑transaction fees
- Non‑sufficient funds (NSF) fees
If the fee is tied to accepting customer payments, it’s usually deductible. That’s why you’ll often hear that payment processing fees tax deductible rules are favorable for most businesses.
IRS rules: When are credit card processing fees tax deductible?
The IRS allows deductions for expenses that are:
- Ordinary and necessary
They must be typical and essential for running a business. - Business-related
Personal card fees don’t qualify. - Incurred within the tax year
Only deduct fees that occurred in the specific year you’re filing for
How to write off payment processing fees
Doing your taxes is hard work. Mistakes can cost you more money in the long run, so keep the following best practices in mind when filing your paperwork:
- Keep accurate, organized records
Bookkeeping matters — especially for fees scattered across statements.
Track fees using:- Accounting software (QuickBooks, Xero, Wave)
- Monthly merchant statements
- Bank account reconciliation
- Separate personal and business expenses
Mixing personal and business transactions complicates deductions and increases audit risk. - Work with a tax professional
A CPA or tax preparer ensures you take every eligible deduction and avoid costly errors. - Stay current on tax rules in your jurisdiction
Tax laws change — keep an eye out for IRS updates each year.
Common mistakes to avoid
Now that you know what to do, let’s talk about what you should avoid.
❌ Using a business credit card for personal expenses
Creates messy records and makes deductions harder.
❌ Double-dipping deductions
Some merchants mistakenly deduct the same fee twice.
❌ Ignoring reimbursements
If someone reimburses your processing fee, you cannot deduct it.
Save more — and track more — with Sekure
Payment processing fees may be unavoidable, but you don’t have to let them erode your profits. Tax deductions help you recover part of those costs — and Sekure helps you save even more year-round.
With Sekure, merchants get lower, more transparent processing rates and POS solutions that make it easy to keep records and keep track of business expenses. Your system automatically organizes transactions, fees, and reports so you always know exactly what you’ve spent — and what you can deduct at tax time. This makes keeping track of business expenses simple and audit-ready.
And if you’re looking to improve your margins even further, Sekure’s Payment Experts are here to help you uncover savings, streamline costs, and take the confusion out of payment processing.
👉 Ready to reduce your fees? Talk to our Payment Experts today.
FAQs about tax-deductible processing fees
Are credit card processing fees tax deductible for small businesses?
Yes. All business types — sole proprietors, LLCs, corporations — can deduct these fees. If you’re wondering are credit card processing fees tax deductible, the answer is yes when the costs are ordinary, necessary, and tied to business activity.
Can I deduct PayPal, Stripe, or Square fees?
Yes. Fees from all major payment processors are deductible.
Where do I deduct processing fees on my tax return?
In the U.S., these typically go under “Business Expenses” on Schedule C, alongside other business expenses tax deductions.
Are debit card processing fees also deductible?
Yes — as long as the fees relate to business transactions.
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