What Are the Broker Fees for Selling Stock?
Selling stock involves costs beyond the commission. Learn how brokerage fees are structured and how they affect your net proceeds and tax obligations.
When selling stock, investors encounter broker fees for services that include executing trade orders and managing investment accounts. Understanding these fees is important, as they directly reduce the total proceeds an investor receives from a sale. The structure and amount of these fees can differ significantly from one brokerage to another, influencing an investor’s overall financial outcome.
Common Brokerage Fee Structures
Brokerage firms use several models to charge for their services. A traditional model is the flat-fee commission, where a fixed charge is applied to each trade, regardless of the number of shares or their total value. Another model is per-share pricing, where the fee is calculated based on the number of shares sold. Some firms, particularly those catering to high-net-worth individuals, may use a percentage-based commission, where the fee is a percentage of the total value of the trade.
A popular model is the zero-commission structure. While these firms don’t charge a direct commission, they generate revenue through methods like payment for order flow (PFOF). This is where the brokerage receives compensation from a third-party market maker for directing customer trade orders to them. The market maker profits from the bid-ask spread—the difference between the buying and selling price of a stock—and shares a portion of that profit with the broker.
These firms also earn income by generating interest on uninvested cash balances in customer accounts and may offer premium services for a subscription fee. While the direct cost per trade is eliminated, costs can be embedded in the trade execution process, potentially affecting the final price an investor receives.
Specific Fees Incurred During a Stock Sale
Beyond the primary commission structure, several specific fees can be applied when an investor sells stock. These are often small, standardized charges, but they contribute to the total cost of a transaction. These can include:
- SEC Section 31 Fee: The Securities and Exchange Commission charges this fee on stock sales, which brokers collect from customers. As of May 2025, this fee was set to $0.00 per million dollars of principal sold.
- FINRA Trading Activity Fee (TAF): The Financial Industry Regulatory Authority imposes this fee on the sale of covered securities. It is $0.000195 per share, with a maximum charge of $9.79 per trade.
- Wire Transfer Fees: If an investor moves sale proceeds out of their brokerage account via wire, a fee of $25 to $50 for domestic transfers may apply.
- Check Request Fees: Requesting a physical check for the proceeds can also incur a fee from the brokerage.
- American Depositary Receipt (ADR) Fees: For trading shares of foreign companies, custodian banks charge periodic pass-through fees, which can range from $0.01 to $0.05 per share.
- Automated Customer Account Transfer Service (ACATS) Fee: If an investor closes their account and moves all assets, they may face this charge, which can range from $50 to $100.
Calculating the Impact of Fees on Investment Returns
The fees associated with selling stock directly reduce the net proceeds and the taxable capital gain. The process involves subtracting all transaction-related costs from the total value of the sale to determine the final amount received by the investor.
For example, an investor sells 1,000 shares of a stock at $50 per share, resulting in gross proceeds of $50,000. If the broker charges a flat commission of $5, the FINRA TAF would be $0.20 (1,000 shares × $0.000195). The total fees would be $5.20, making the net proceeds from the sale $49,994.80 ($50,000 – $5.20).
Brokerage fees and commissions are not treated as a separate tax deduction. Instead, these costs are accounted for when calculating the capital gain or loss from the sale. According to IRS regulations, selling expenses are subtracted from the gross proceeds to arrive at the net sale price used for tax reporting on Form 8949. This adjustment reduces the reported capital gain or increases the reported capital loss.
For instance, if the investor in the previous example had a cost basis (the original purchase price plus any buying commissions) of $30,000, their taxable capital gain would be calculated on the net proceeds of $49,994.80. The resulting capital gain would be $19,994.80, which is then reported on their tax return.
How to Find Your Broker’s Fee Information
Brokerage firms are required to be transparent about their pricing, and this information is available on their official website or through their trading application. Investors should look for links in the website’s footer or main navigation menu with labels such as “Pricing,” “Commissions & Fees,” or “Legal.”
Within these sections, the primary document to find is the “Fee Schedule.” This document provides a comprehensive list of all potential charges, from trading commissions to account maintenance and service fees. It will detail the exact dollar amounts or percentage rates for items like wire transfers, check requests, and account transfer (ACATS) fees. Reading this document allows an investor to anticipate costs. It is advisable to download or save a copy of this document for your records, as fee structures can change over time.