Like many deductions, license fees and expenses are deductible if they qualify as a business expenses. Otherwise, personal license fees generally are not allowed as a tax deduction. Talk to an accountant or tax professional if you need personal advice about appropriate deductions.
According to the Internal Revenue Service, you cannot deduct license fees or taxes for licenses that you use for personal purposes. The IRS cites such fees as marriage licenses, driver's licenses and pet licensing fees. Renewal fees are treated the same way, meaning as long as you use the license for personal purposes, you cannot deduct the renewal expenses.
The Internal Revenue Service reports that you can deduct license expenses, such as renewals, as long as you incur the expense because of your trade, business or profession. For example, if you are an attorney and must pay a yearly fee to remain licensed in your state, you can deduct this fee.
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Initial Fees and Renewals
License renewal fees are generally deductible if the fee is for professional or business purposes, but accreditation fees are not deductible. The Internal Revenue Service reports that any professional license fees you initially pay are not deductible. For example, if you are an accountant and pay an initial fee for the right to practice accounting, these fees are not deductible. However, you can deduct later renewal fees for the same license.
If you pay a license renewal fee as part of your employment and your employer reimburses you for the expense, you cannot deduct the fee on your taxes. If the fee is not reimbursed, you can deduct the expense, typically as an itemized expense on your yearly tax return.