Can I Write This Off?

How do I deduct gift to client tax deductible on my taxes?

TL;DR

Gifts to clients are generally deductible, but the IRS limits the deduction to $25 per recipient per year. This limit applies regardless of the number of gifts given to the same recipient.

Detailed Answer

You can deduct up to $25 for business gifts you give to each person during the tax year. If you give a gift to a client and their spouse, the $25 limit applies to the combined gifts given to both. Incidental costs, such as engraving or packaging, do not count toward the $25 limit. However, gifts that are considered entertainment, such as tickets to an event, are not deductible as gifts, but may be deductible as entertainment expenses under different rules. Promotional items with your business name that cost $4 or less are not subject to the $25 limit.

Where to Put It on the Tax Form

Schedule C, Line 27a

Real World Example

A freelance graphic designer gives a $20 branded mug to a client as a holiday gift. The designer can deduct the full $20 as it is under the $25 limit. If the designer also sends a $10 box of chocolates to the same client, the total deduction for gifts to that client is capped at $25 for the year.

Audit Risk & Documentation Tips

Audit risk is moderate. Keep detailed records of each gift, including the date, recipient, cost, and business purpose. Save receipts and any correspondence related to the gift. Ensure gifts are clearly separated from entertainment expenses in your records.

IRS Reference

IRS Publication 463 (Travel, Gift, and Car Expenses)

Relevant Industries

FreelancersConsultantsReal Estate AgentsSales Professionals

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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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