Can I Deduct Professional License Fees?

Many professionals pay annual fees to maintain their licenses, and whether that cost is deductible depends on how you earn your income. Self-employed workers and independent contractors can deduct professional license fees as a business expense since the license is necessary to operate. Employees who pay for their own professional licenses generally cannot deduct those costs under current tax law. If your employer requires you to maintain a license but does not reimburse you, asking for reimbursement is a better path than trying to claim a deduction as an employee. State tax rules vary, and some states still allow employees to deduct unreimbursed work expenses that are no longer deductible at the federal level.