Is tax deductible gifts to clients a business expense?

Gifts to clients are deductible as a business expense under IRS rules, but the deduction is limited to $25 per recipient per year. This means if you give a gift worth $50 to a single client, only $25 is deductible. The $25 limit applies to both direct gifts and indirect gifts (e.g., gifts given to a client's family). Exceptions include promotional items like pens or calendars with your business name, which are not subject to the $25 limit if they cost $4 or less. Additionally, gifts that are considered entertainment, such as tickets to an event, may be subject to different rules and should be evaluated separately.