Yes. Credit card processing fees are generally tax deductible as an ordinary and necessary business expense. Record your gross card sales as income and the fees as a separate expense, rather than only recording net deposits. Surcharges you collect are generally revenue. Confirm the details with your tax professional.
Key takeaways
- Processing fees are generally a deductible business expense.
- Record gross sales as income and fees as an expense, not just net deposits.
- Monthly fees like PCI, statement and equipment fees are usually deductible too.
- Surcharges you collect are generally revenue.
- A deduction lowers your tax, but cutting the fees saves you more.
How processing fees are treated
The IRS allows businesses to deduct ordinary and necessary expenses of running the business. Fees paid to accept customer card payments, including the percentage fee, per-transaction fees, and monthly fees like PCI, statement and gateway fees, generally fall into that category.
How to record them correctly
- Record gross sales as income. Use the total card sales from your statement, not just what hit your bank.
- Record fees as an expense. Use the total fees line from your monthly statement (see how to read a merchant statement).
- Keep your monthly statements as records.
- Let your accounting software help. Tools like QuickBooks can separate fees automatically; see QuickBooks Payments fees.
A deduction is good. Paying less is better.
A deduction only gives back a fraction of what you spend. If your business pays $3,000 a month in fees and is in a 25% tax bracket, the deduction is worth about $750 a month, but you're still out $2,250. Cutting the fees themselves saves more. See how to reduce credit card processing fees, or check your numbers with the credit card processing fee calculator.
Not tax advice. This is general information. Tax treatment depends on your business structure and situation, so confirm with a tax professional.
Frequently asked questions
Are credit card processing fees tax deductible?
Where do I deduct credit card processing fees?
Do I report gross sales or net deposits?
Is a surcharge I collect taxable income?
Can I deduct fees I pay as a customer?
This article is general information, not legal, tax or financial advice. Card network rules and state laws change; confirm the rules for your business before changing how you charge customers.