Is client gifts tax deductible a business expense?

The IRS allows businesses to deduct the cost of gifts given to clients or customers, but the deduction is limited to $25 per recipient per year. This limit applies regardless of the number of gifts given to the same recipient. Incidental costs, such as engraving, packaging, or shipping, do not count towards the $25 limit if they do not add substantial value to the gift. Gifts that are considered promotional items, such as pens or calendars with your business name, may not be subject to this limit if they are widely distributed and cost less than $4 each. Additionally, gifts to a company, rather than an individual, may be deductible if there is no specific individual identified as the recipient. It's important to note that gifts to employees are subject to different rules and are not covered under this $25 limit.