Are Corporate Gifts Tax-Deductible?

Sep 9, 2024

The short answer: Yes, corporate gifts can often be tax-deductible—but the rules vary based on who receives your gift and how you structure your giving.

Are Gifts for Clients & Business Partners Tax-Deductible?

Basic Rule: $25 Per Person (Non-Employee) Per Year

When gifting to anyone who isn’t an employee (clients, prospects, vendors, business partners, or independent contractors), the IRS allows businesses to deduct up to $25 per recipient per year as a business expense.

Key Exceptions That May Affect Your Deduction:

Gifts to companies for use in their business (not individuals) have no $25 limit

Instead of deducting $25 on one gift for a CEO, you can deduct the entire cost of a gift to their company (for ex. a shareable 100$ office gift box that they can enjoy with their team) within reason.

Incidental costs related to business gifts may not be counted towards the $25 limit. This could include engraving, gift-wrapping, packaging, shipping, or other related costs that don’t add substantial value to the gift.

Instead of deducting $25 on a $35 gift box that includes free shipping, request to itemize your receipt as a $25 gift box + $10 shipping.

Are Gifts for Employees Tax-Deductible?

Basic Rule: No Limit on Employee Gift Tax Deductions

Employee gifts are fully-deductible as a business expense.

However, some gifts are considered taxable income for the employees who receive them.

Gifts that are Potentially Tax-Free for Your Employees

Occasional gifts: A standard gift box may qualify as a tax-free "de minimis" benefit. (It may depend on the purpose of the gift, but think of small and sporadic treats that would be impractical to account for.)
Achievement awards: Employees may receive up to $400 in tax-free recognition gifts (or up to $1,600 with a qualified written plan).
Wellness programs: Wellness programs involving gifts may be eligible for state tax credits or coverage through your company healthcare plan. Potentially considered as tax-free benefits for your employees.
Office supplies for business use: meeting refreshments, office snacks, coffee, etc. are tax-deductible and tax-free for employees.

Avoid Taxable Gifts

Cash or gift cards (must always be reported and will be taxable for your employees)
High-value personal gifts (may need to be reported and will potentially be taxable for your employees)
Gifts that could be considered entertainment are treated as entertainment – and cannot be deducted as such.

How to Document Gifts for Tax Deductions

Keep records of:

Recipient's name and business relationship to your company
Date the gift was given
Description of the gift and its contents
Cost of the gift (broken down into shipping and contents if needed)
Optional: Business purpose of the gift (relationship building, employee wellness, client retention, promotional materials, etc.)

Be sure to save all receipts, invoices, and shipping confirmations

Tip: We offer pre-formatted records with your order to make your tax documentation easy!

Narrative Food’s Approach to Tax-Smart Gifting

1. Business Gifts

Perfect for holiday appreciation, welcome gifts, and milestone celebrations.

Starting at $25, our gifts are designed to account for the standard $25 deduction.
Our larger gift boxes may be fully-deductible when given to a company’s entire team.
Request our pre-formatted records with your bulk gifts for easy tax documentation.

2. Employee Gifts

We offer individual gifts for every occasion and subscriptions designed for remote teams.

Food gifts (like ours) are typically tax-free for employees and often fully-deductible for your company.
Think occasional gifts of gratitude, achievement and recognition awards, wellness programs, or even office supplies for business use.
Never gifts that can be considered taxable: cash, gift cards, valuables, and entertainment.

3. And Custom Projects for all of your gifting needs.

Ex. Custom gifts that support your favorite makers and tell your story.
Ex. Meeting refreshments paired with team-building food experiences.
Ex. Promote remote team culture while supporting health.
Ex. Rewards and tools for participation in wellness programs.

Ready to Get Started?

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Looking for a gift that fits your tax strategy?

Our approach is always designed for your gifting needs.

Get in touch to explore custom solutions for your business.

Narrative Food is a Maine-based Certified B Corp specializing in sustainable corporate food gifts that build relationships, support employee wellness, and create positive social impact through partnerships with small-batch makers nationwide.

Talk to Your Tax Professional

Remember: This information is for general guidance only. Tax laws are complex and change frequently. Always consult with qualified tax professionals for advice specific to your business situation.