Can I deduct tax deductible gifts to clients?

Gifts to clients are deductible as a business expense, but the IRS imposes a strict limit of $25 per recipient per year. This means if you give a client a gift worth $50, only $25 is deductible. Items that are considered promotional materials, such as pens or calendars with your business name, do not count towards this limit if they cost $4 or less. Additionally, incidental costs such as engraving, packaging, or shipping are not included in the $25 limit as long as they do not add substantial value to the gift. It's important to note that gifts to a client's family members are considered gifts to the client unless you have a bona fide business connection with the family member.