Amazon FBA Seller Tax Deductions: 2026 Write-Offs Guide

Last updated June 2026.

Selling on Amazon FBA hides your real costs inside a settlement report. Amazon takes a referral fee, a fulfillment fee, and a monthly storage fee out of every order before the money hits your bank, so the deposit you see is already net of expenses you are allowed to deduct in full. On top of that, the product itself runs through cost of goods sold, not a plain supplies line, and you do not deduct it until the unit actually sells. Pull every fee off your Amazon reports, track your inventory cost correctly, and most FBA sellers also qualify for the full 20% qualified business income deduction because online retail is a product business. Here is exactly what an Amazon FBA seller can write off in 2026 and where each item goes on the return.

What can an Amazon FBA seller write off on taxes?

An Amazon FBA seller can write off every ordinary and necessary cost of running the business: Amazon referral and FBA fulfillment fees, monthly and long-term storage fees, the cost of the products you sell (through cost of goods sold), inbound shipping to Amazon warehouses, the Professional selling plan subscription, product photography, software and prep services, mileage, a home office, and equipment. The rule is IRC Section 162: if the cost is ordinary for an online retailer and necessary for your business, it is deductible. The work is not deciding whether a cost counts, it is pulling the fees off your Amazon settlement reports and separating product cost (cost of goods sold) from operating expenses.

Two buckets matter for FBA. Operating expenses (Amazon fees, software, advertising, mileage, home office) reduce your income in the year you incur them. Cost of goods sold (the product itself plus freight into Amazon) reduces income only when the unit sells. Mixing the two up is the single most common FBA tax mistake, and it usually means paying tax on inventory you bought but have not sold yet.

Are Amazon seller fees tax deductible?

Yes. Every Amazon fee an FBA seller pays is fully tax deductible as a business expense. That includes the referral fee (the percentage Amazon takes per sale), the FBA fulfillment fee (pick, pack, and ship), monthly inventory storage fees, the aged or long-term storage surcharge, inventory placement service fees, removal and disposal fees, returns processing fees, low-inventory-level fees, and the $39.99 per month Professional selling plan. These are selling expenses, so they go on Schedule C as commissions and fees (line 10) or other expenses (line 27a). Either line is fine as long as you do not count the same fee twice.

Important: Amazon fees are NOT cost of goods sold. They are a separate selling expense. Your product cost is cost of goods sold; the fees Amazon charges to sell and ship that product are operating expenses. Your Amazon settlement report or a tool that reads it will show every fee broken out, which is the cleanest record to deduct from. If you collect dozens of fee lines a month, a tool that turns those Amazon reports and supplier receipts into a clean receipt to Excel sheet makes the year-end tally a copy-paste job instead of a reconciliation project.

How do I deduct inventory and cost of goods sold as an FBA seller?

You deduct inventory through cost of goods sold, and only as each unit sells, not when you buy it. The math is opening inventory, plus purchases and inbound freight during the year, minus closing inventory, equals cost of goods sold. That figure goes in Schedule C Part III (lines 33 to 42) and flows to line 4. If you buy 1,000 units in December and sell 200 by year-end, you deduct the cost of 200 units this year; the other 800 stay in inventory and get deducted as they sell next year. Inbound shipping to Amazon warehouses (freight-in) is part of that inventory cost, not a separate line.

There is a small-business shortcut. Under IRC Section 471(c), a seller whose average annual gross receipts are under $32 million for 2026 is exempt from the formal inventory rules and can treat inventory as non-incidental materials and supplies, deducted in the year the items are sold or used. You still cannot deduct unsold stock, but you avoid the formal accrual-inventory machinery. Most FBA sellers fall well under the threshold and use this method.

What business code does an Amazon seller use on Schedule C?

Use principal business code 454110, Electronic Shopping and Mail-Order Houses. That is the IRS Schedule C code for online and catalog retailers, and it covers selling on Amazon, your own site, or any marketplace. The code does not change your deductions, but it tells the IRS you are a retailer, which is consistent with reporting cost of goods sold and claiming the full qualified business income deduction as a non-service business.

Do Amazon FBA sellers have to collect sales tax?

On Amazon sales, generally no. As of 2026 Amazon collects and remits sales tax as a marketplace facilitator in all 45 sales-tax states plus Washington DC, so FBA sellers do not collect or remit marketplace sales tax on their Amazon orders. You still have to watch two things. First, sales you make off Amazon (your own Shopify store, a craft fair, wholesale) are not covered by Amazon's collection, and you may owe sales tax on those where you have nexus. Second, storing FBA inventory in a state can create nexus there for your non-Amazon channels. The sales tax Amazon collects and remits is not your income and not your expense; it passes through and does not touch your Schedule C.

What is the 1099-K threshold for Amazon sellers in 2026?

For 2026 the federal Form 1099-K threshold is more than $20,000 in gross payments and more than 200 transactions. The One Big Beautiful Bill Act, signed July 4, 2025, repealed the planned $600 threshold and restored the old $20,000 and 200-transaction rule for 2025 and later years. Amazon issues your 1099-K (Seller Central, Reports, Tax Document Library) when you cross both numbers. A handful of states (Massachusetts, Maryland, Virginia, New Jersey and others) keep lower thresholds, so you may get one even under $20,000.

The threshold only controls whether the form gets filed; it does not control whether your income is taxable. All your Amazon sales are reportable income whether or not a 1099-K shows up. Report gross sales, then deduct fees, returns, and cost of goods sold to get to your taxable profit. If your 1099-K is higher than the cash you actually received, that is normal: it reports gross before Amazon's fees and refunds come out, which is exactly why you deduct those fees.

Can I take the home office deduction as an FBA seller?

Yes, and FBA sellers get a special break most home businesses do not. The standard home office deduction needs a space used regularly and exclusively for business, and the simplified method gives you $5 per square foot up to 300 square feet, a $1,500 maximum. But under IRC Section 280A(c)(2), space you use on a regular basis to store inventory or product samples is deductible even if it is NOT used exclusively for business, as long as your home is the only fixed location of the business. That means the corner of your garage or a spare room where you stage inventory before shipping it to Amazon can count, even if the kids' bikes share the garage. This inventory-storage exception is worth real money for FBA sellers who buy and prep at home.

Can I deduct mileage for sourcing and shipping inventory?

Yes. Driving to source product (retail arbitrage runs, wholesale pickups), to ship inventory to Amazon, and to the post office or UPS for removals and returns is deductible business mileage. The 2026 standard mileage rate is 72.5 cents per mile (IRS Notice 2026-10), up from 70 cents in 2025. Keep a log with the date, miles, and business purpose; a contemporaneous record is what holds up if anyone asks. Commuting does not count, but a sourcing trip from home to three stores and back is business driving the whole way. You choose between the standard mileage rate and actual vehicle costs in the first year you use the car for business, so pick the one that gives the bigger deduction.

Can I write off a computer, label printer, or shelving?

Yes. The equipment an FBA business runs on is deductible: a computer or laptop, a thermal label printer, a scale, a heat gun and poly bags for prep, shelving and storage bins, a camera or lightbox for listing photos, and software subscriptions. Anything that costs $2,500 or less per item can be written off in full the year you buy it under the de minimis safe harbor. For bigger purchases, Section 179 lets you expense up to $2,560,000 of equipment in 2026, and 100% bonus depreciation (made permanent for property placed in service after January 19, 2025) writes off the rest. In practice an FBA seller's gear is almost always under the de minimis limit, so you deduct it immediately.

What else can Amazon FBA sellers deduct?

The list runs longer than most new sellers expect. Common FBA deductions beyond fees, inventory, mileage, home office, and equipment include:

• Software and tools: accounting software, inventory and repricing tools, keyword and product-research subscriptions, and the apps that pull your Amazon reports.
• Prep and freight services: third-party prep centers, freight forwarders, and customs brokerage on imported goods.
• Advertising: Amazon Sponsored Products and Sponsored Brands spend, plus any off-Amazon ads driving traffic to your listings.
• Professional services: bookkeeper, CPA, and tax-prep fees, plus business legal fees and your LLC or registration costs.
• Samples and product testing: units you buy to evaluate a supplier or photograph for a listing.
• Bank and merchant fees, business insurance, and education directly tied to running the store.

Track these as you go, because a $40 software charge or a $15 sample looks trivial in the moment and adds up to thousands across a year. The sellers who keep the most are not the ones who find exotic deductions; they are the ones who capture every ordinary one. Snap every supplier receipt and prep invoice into a single sheet so nothing slips through, and your receipt tracker for small business becomes the backbone of an accurate Schedule C.

Do FBA sellers qualify for the QBI deduction?

Yes. Amazon FBA selling is a qualified trade or business, not a specified service business, so it qualifies for the full 20% qualified business income deduction under Section 199A. You deduct 20% of your net business profit on top of your ordinary deductions. For 2026 you get the full deduction without limitation if taxable income is at or below $201,750 (single) or $403,500 (married filing jointly), per Rev. Proc. 2025-32. Above those levels the deduction phases out over a range, but because retail is not a service business it is not cut off entirely the way a consultant's would be. There is also a new $400 minimum deduction for an active business with at least $1,000 of QBI. On a $60,000 FBA profit, the QBI deduction alone can knock $12,000 off taxable income.

How much self-employment tax do FBA sellers pay?

If you run your FBA business as a sole proprietor or single-member LLC, your net profit is subject to self-employment tax of 15.3% (12.4% Social Security plus 2.9% Medicare). For 2026 the 12.4% Social Security portion applies to the first $184,500 of combined wages and self-employment income; the 2.9% Medicare portion has no cap. You pay this in addition to income tax, and you pay both through quarterly estimated taxes (Form 1040-ES) since Amazon does not withhold anything. A useful planning move: you can shelter profit with a SEP-IRA (up to $72,000 for 2026) or a Solo 401(k) (employee deferral up to $24,500 for 2026 plus the employer share), which lowers your income tax while building retirement savings.

Can I deduct startup costs for a new FBA business?

Yes. The money you spend getting an FBA business off the ground before your first sale (researching products, forming an LLC, your first software subscriptions, training) is a startup cost under IRC Section 195. You can deduct up to $5,000 of those costs in your first year, and the rest is amortized over 180 months (15 years). The rules are the same for any new venture, so the full business startup costs deduction guide walks through what counts and how the amortization works. Keep these receipts separate from your ongoing operating costs, because the IRS treats pre-launch spending differently from the deductions you take once the business is running.

The bottom line for Amazon FBA sellers

Your biggest deductions are sitting in your Amazon settlement reports and your supplier receipts, not in some obscure rule. Pull every referral, fulfillment, and storage fee Amazon charges. Run product cost through cost of goods sold and deduct it only as units sell. Claim the inventory-storage home office space, your mileage, your gear, and the 20% QBI deduction. The sellers who keep the most are simply the ones who capture every ordinary cost, and the way to do that is to stop letting receipts and fee reports pile up. Turn them into a clean spreadsheet as they come in.

If you sell across more than one channel, the same habit pays off everywhere, and our broader guide to tax deductions for online sellers covers the write-offs that apply to eBay, Etsy, and your own store too. When you also sell off Amazon and need the numbers in your books, a tool that handles scanning receipts into QuickBooks closes the loop from purchase to ledger. To keep your purchase records straight when you reorder inventory from suppliers, the purchase order software keeps every supplier order in one place. And when it is time to reconcile a year of Amazon deposits against what actually hit your account, converting your statements with a bank statement to QuickBooks converter turns the bank side into clean, categorized lines.

This article is general information, not tax advice. FBA tax situations vary, especially around nexus, imports, and entity choice, so confirm your specifics with a CPA who works with online sellers.