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Income & Expenses

Question: Are business gifts deductible?

Answer:

If you give business gifts in the course of your trade or business you can deduct all or part of the costs subject to the following limitations:

  • You deduct no more than $25 of the cost of business gifts you give directly or indirectly to each person during your tax year.
    1. If you and your spouse both give gifts to the same person, both of you are treated as one taxpayer.
    2. Incidental costs such as engraving, packing or shipping are not included in the $25 limit.
    3. Gifts costing $4.00 or less that have your business name permanently engraved on the item, and which you distribute on a regular basis are not considered gifts for purposes of the $25 per person limit.

You need to have records that prove the business purpose of the gift as well as the details of the amount spent.

Additional Information:


Category: Small Business, Self Employed, Other Business
Subcategory: Income & Expenses

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224