Checkmark iconCan I Write This Off?

Is are client gifts tax deductible a business expense?

TL;DR

Client gifts are partially tax deductible as a business expense, subject to certain limitations.

Detailed Answer

The IRS allows a deduction for business gifts up to $25 per recipient per year. This means if you give a gift valued at more than $25 to a single client, only $25 of that gift is deductible. Incidental costs such as engraving, packaging, or shipping are not included in the $25 limit. Gifts to a company that are intended for the personal use or benefit of a particular person are also subject to the $25 limit.

Where to Put It on the Tax Form

Schedule C, Line 27a for sole proprietors; Schedule A, Line 16 for itemized deductions if applicable.

Real World Example

A marketing consultant gives a $50 gift basket to a client. Only $25 of this gift is deductible as a business expense.

Calculation Required

A calculation is required for this deduction.

Calculate the deductible amount by summing all gifts given to a single recipient and applying the $25 limit. For example, if you give two gifts worth $15 and $20 to the same client in a year, only $25 is deductible.

Audit Risk & Documentation Tips

Keep detailed records of each gift, including receipts, the business purpose, and the recipient's name. This documentation will help substantiate the deduction in case of an audit.

IRS Reference

IRS Publication 463, Chapter 3

Relevant Industries

Small BusinessConsultantsSales ProfessionalsMarketing Agencies

Popular Related Pages

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

Back to Search