Are Corporate Gifts Tax Deductible?

In a perfect world, corporate gifting would be a fun and carefree way to show your professional connections — employees, sales teams, clients, etc. — just how much they mean to you with a thoughtful gift that will leave a lasting impression for years to come. While this can certainly be the case, it’s important to consider the tax implications of the gifts you choose to send to your recipients for holidays, celebrations, milestones, and more.

How do you know which gifts are the deductible? Are there limits to how much you should spend? How are employee gifts taxed? What kind of records should you be keeping?

We’ve been around the corporate gifting industry for a long time, and we know how confusing it can be to do things the right way. We’re here to answer all of your burning corporate gifting tax questions. Let’s get started!

Understanding Tax Deductions for Corporate Gifts: The Benefits

Navigating the maze of tax deductions can be tricky, but understanding what corporate gifts are tax-deductible, the taxation of gifts to employees,  and the amounts that qualify is essential for savvy business finances. Knowing these details not only ensures compliance with tax laws but can also significantly benefit your company's bottom line.

Tax Deductible Corporate Gifts: What You Really Need to Know

Getting started with smart corporate gifting? Whether you're curious about tax limitations or taxing gifts to employees, clients, or colleagues, it all starts with ensuring that your gift-giving is not only thoughtful and meaningful for your recipients, but also that it won’t strain your organization’s bottom line when it comes to tax season — or worse, get you into legal hot water. 

Here’s what you actually need to know to get started with business-savvy corporate gifting:*

• A gift can be considered tax-deductible if it is given in the course of your trade or business with the intention of enhancing a business relationship.
• The IRS allows a deduction of no more than $25 for business gifts given to each person during your tax year.
• Gifts intended for personal use or benefit, like dinner or concert tickets, count as indirect gifts. The $25 deductible limit per individual applies here as well.
• If a partnership gives gifts, all partners are taxed jointly for these donations.
• Costs for creating marketing materials and funding prizes can be fully deducted without a $25 limit.
• It’s critical that you keep detailed records of the purpose of each gift that you give as well as the details about the amount of money spent on the gift.
• When it comes to taxing gifts to employees, you'll want to consider your company policies. When gifting outside of your organization, take into account that company's gifting policies. 
• Classification of Gifts vs. Promotional Material: Understanding the difference is key in order to maximize your deductions.

For more detailed information, visit the IRS guidelines on corporate gift deductions.

*Please note, this information should be used as a guide only and does not constitute tax advice.

Want to Make Corporate Gifting Easy? 

Partnering with a professional gifting company provides you with a hassle-free experience, ensuring that your gifts are not only impressive but also compliant with tax regulations.

• Employee appreciation gifts
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• Client holiday gifts
• Client appreciation gifts
• Creative client gifts
• Luxury gifts for clients

• Creative gift boxes for team-building events
• Combination gift boxes for product launches or promo events (included your own corporate swag)

• Pre-curated gift boxes for smaller budgets and tight timeframes
• Full gift box design services to match your brand for larger projects/budgets

Looking to Elevate Your Corporate Gifting Game?

We’d be happy to help you navigate corporate gifting from start to finish with a thoughtful strategy for business gifts! Book a consultation, get a quote, or have your questions answered at the click of a button. Contact us today!