Is are promotional items tax deductible a business expense?

Promotional items can be deducted as a business expense under IRS guidelines if they are used to promote your business and are considered ordinary (common and accepted in your trade) and necessary (helpful and appropriate for your business). These items can include branded merchandise like pens, mugs, or t-shirts given to clients or potential customers. However, the cost of the items must be reasonable, and they should not be considered lavish or extravagant. Additionally, if the items are considered gifts, there is a $25 limit per recipient per year. It's important to differentiate between promotional items and gifts, as the latter has stricter limits. For example, giving away a branded pen at a trade show would generally be deductible as a promotional item, while a personalized gift basket might fall under the gift category and be subject to the $25 limit.