Is Gifts to Clients Tax Deductible for Your Business?

Gifts to Clients is partially tax deductible for business purposes. You can only deduct the portion that is directly used for your business. Accurate tracking and documentation of your business usage percentage is essential.

Key Rules for Deducting Gifts to Clients

Business gifts are limited to $25 per recipient per year. Incidental costs (engraving, wrapping, shipping) do NOT count toward the limit. Gifts to a business entity (not a specific person) may not be subject to the limit.

Requirements to Claim This Deduction

• $25 maximum per person per year
• Shipping/wrapping don't count toward limit
• Keep log of recipients

How to Document Gifts to Clients for Tax Purposes

Proper documentation is critical for any business deduction. For gifts to clients, you should:

• Keep all receipts and invoices showing the amount paid
• Record the date of the expense and the business purpose
• If mixed-use, maintain a log showing business vs. personal usage
• Store records for at least 3 years (7 years for major purchases)

Source: IRC § 274(b). This information is for educational purposes only. Consult a qualified tax professional for advice specific to your situation.