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Are business gifts deductible?

Updated: Dec 12, 2022

If you give business gifts during 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.

  • If you and your spouse both give gifts to the same person, both of you are treated as one taxpayer.

  • Incidental costs such as engraving, packing, or shipping aren't included in the $25 limit if they don't add substantial value to the gift.

  • For purposes of the $25 per person limit, don't consider gifts costing $4.00 or less that have your business name permanently engraved on the item and which you distribute on a regular basis.

  • Any item that could be considered either a gift or as entertainment is generally considered entertainment and cannot be deducted.

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

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