Can I Write This Off?

Can I deduct client gifts tax deductible?

TL;DR

Client gifts are tax deductible, but there is a limit of $25 per recipient per tax year.

Detailed Answer

The IRS allows businesses to deduct up to $25 for business gifts given to each individual recipient per tax year. This means if you give a gift to a client that costs more than $25, only $25 of that cost is deductible. Items that are considered promotional materials, such as pens or calendars with your company name, are not subject to this limit if they cost $4 or less and are distributed widely.

Where to Put It on the Tax Form

Report this deduction on Schedule C (Form 1040) under 'Other Expenses'.

Real World Example

A freelance graphic designer gives a $30 custom mug to a client as a holiday gift. The designer can deduct $25 of the cost as a business expense, adhering to the IRS limit.

Calculation Required

A calculation is required for this deduction.

Calculate the total cost of gifts given to each client and apply the $25 limit per client. For example, if you give a $30 gift, only $25 is deductible.

Audit Risk & Documentation Tips

Keep detailed records of each gift, including the cost, the date given, and the business purpose. Retain receipts and note the recipient's name to substantiate the deduction in case of an audit.

IRS Reference

IRS Publication 463, Chapter 3

Relevant Industries

Small BusinessConsultantsSales ProfessionalsFreelancers

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 15, 2025

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