Client gifts are tax deductible, up to $25 per recipient per year. Internal Revenue Service Publication 463 puts it plainly: "You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year."
We make gifts rather than give tax advice, so treat this as general information drawn from Internal Revenue Service guidance and confirm how the rules apply to your business with your own tax adviser. If you are choosing the gifts themselves, see our luxury corporate gifts for clients.
Client gifts are deductible up to $25 per recipient per year
The $25 figure is written into section 274(b) of the Internal Revenue Code, so it changes only if the law changes. It applies to the cost of the gift itself, for each person, each year.
The rule in brief
- You can deduct up to $25 of gifts to each person each year.
- Engraving, packing and mailing usually sit outside the limit.
- Branded items of $4 or less and display material for a client's premises do not count.
- A gift to a client's family usually counts as a gift to the client.
Some costs sit outside the $25 limit
Engraving, packing and shipping are usually incidental
Publication 463 says incidental costs, "such as engraving on jewelry, or packaging, insuring, and mailing," are generally not included in the cost of a gift for the $25 limit. The test is value: "A cost is incidental only if it doesn't add substantial value to the gift." Publication 463 counts gift wrapping as incidental, while an ornamental basket worth a lot next to the fruit inside it is part of the gift.
The presentation box
Every Harris Made gift is hand-wrapped in a foil-embossed presentation box branded for the client, with a printed notecard inside. Whether a box like that adds substantial value to the gift is a question for your accountant, so ask before you count it as incidental.
Bespoke engraving and embossing
The crest on our brass is engraved, and on leather it is blind-embossed or foil-stamped. Because that work is part of the design, ask your accountant whether it counts as incidental or as part of the gift's cost.
Branded items of $4 or less do not count
An item that costs $4 or less is outside the limit if your name is clearly and permanently imprinted on it and it is 1 of a number of identical items you hand out widely. Publication 463 gives pens, desk sets and plastic bags and cases as examples.
Signs and display racks for a client's premises do not count
Signs, display racks and other promotional material to be used on the client's business premises are also outside the limit.
Some gifts count against the limit in less obvious ways
A gift to a client's family counts as a gift to the client
A gift to a member of a client's family is generally an indirect gift to the client. The exception is a family member you have a genuine, independent business connection with, when the gift is not meant for the client's eventual use.
A gift to a company meant for its people counts as a gift to them
A gift to a company that is intended for the personal use of a particular person, or a small group, is treated as a gift to each of those people. In the Publication 463 example, 3 gift baskets at $80 each, taken home by 3 executives, give a deduction of $75: $25 for each person.
Spouses and partnerships count as 1 giver
If you and your spouse both give gifts, you are treated as 1 taxpayer, even with separate businesses. A partnership and its partners are also treated as 1 taxpayer, so they share the $25 limit for each recipient.
Tickets and food can count as entertainment
Publication 463 says that "any item that might be considered either a gift or entertainment will generally be considered entertainment," and entertainment is generally not deductible. If you take a client to a game or a show, that is entertainment. Packaged food or drink that you give a client to use at a later date is treated as a gift, so it falls under the $25 limit.
A gift above $25 is fine, and $25 of it is deductible
The limit applies only to the deduction, so you can spend whatever the relationship deserves. You deduct $25 of each gift's cost and pay the rest without any deduction.
A worked example for 125 clients
The figures below are hypothetical. A firm gives 125 clients a silk scarf costing $65 each, and the engraving, box and shipping are billed on separate lines. Our prices are "from" prices and vary by design, and 125 is our requested minimum per design.
| Cost | Per client | 125 clients |
|---|---|---|
| Gift cost | $65 | $8,125 |
| Deductible gift cost | $25 | $3,125 |
| Gift cost that is not deductible | $40 | $5,000 |
| Incidental costs, billed separately | Ask your accountant | Deductible if they qualify |
The gift cost
At $25 each, 125 gifts give a deduction of $3,125. The other $40 of each gift, $5,000 in all, is not deductible.
The incidental costs
Packing and shipping that qualify as incidental may be deductible in full, which is why it helps to see them on their own invoice lines.
Employee gifts follow different rules
Small holiday gifts
Internal Revenue Service Publication 15-B lists holiday or birthday gifts, other than cash, with a low fair market value among the small benefits that can be left out of an employee's wages. Cash, gift cards and gift certificates, however small, never qualify.
Length of service awards
An award for length of service or safety can also be left out of wages if it is tangible personal property, given as part of a meaningful presentation. Your deduction for awards to any 1 employee in a year is limited to $400 for awards that are not qualified plan awards, and $1,600 for all awards together. A qualified plan award is given under an established written plan that does not favor highly paid employees. See our employee recognition gifts and our employee recognition gift ideas.
Nonprofits thanking donors follow charity rules
For a charity, the question is the donor's deduction. When a donor pays more than $75 and receives goods or services in return, the charity must give the donor a written statement with a good faith estimate of their value, unless the value is insubstantial, as the Internal Revenue Service explains in its guidance on quid pro quo contributions. Our guide to thank you letters for donations covers the acknowledgment, and you will find the gifts themselves on our donor recognition gifts page.
Good records protect the deduction
For each gift, Publication 463 asks you to record the cost, the date and a description. Add who received it and why, which shows the business purpose, and keep invoices that list incidental costs such as engraving, packing and shipping on separate lines.
Harris Made makes client gifts worth more than the deduction
We would choose a client gift for the relationship and count the deduction as a small extra. Our Lapel Pin starts from $15, under the $25 limit. Above it, a Luggage Tag starts from $28, a Card Holder from $32, Enamel Cufflinks from $45 and a Bespoke Silk Tie from $48. You can browse the catalog or read our luxury corporate gift ideas. Our corporate gifts for clients and executives page shows what we make for firms, and when you are ready, start a project.
We checked these rules against Internal Revenue Service Publication 463 (2025), Publication 15-B (2026) and section 274 of the Internal Revenue Code on November 7, 2026. Tax rules change, so confirm with your own tax adviser before you rely on them.
Frequently asked questions
Are corporate gifts to clients tax deductible?
Yes, up to $25 per recipient per year, and incidental costs such as engraving, packing and mailing usually sit outside that limit. Confirm the details with your own tax adviser.
Can I write off a client appreciation event?
Entertainment is generally not deductible. Food and drink bought or billed separately from the entertainment may be deductible as a business meal, generally at 50%, so ask your tax adviser how that applies to your event.
What is the business gift deduction limit?
It is $25 per recipient per year, the figure written into section 274(b) of the Internal Revenue Code. It changes only if the law changes, so check the current Publication 463 each year.
Which gifts are tax deductible?
Business gifts up to $25 per recipient per year, plus qualifying incidental costs. Branded items costing $4 or less that you hand out widely, and signs or displays for a client's premises, do not count toward the limit.
Does the $25 limit include shipping and engraving?
Usually not. Publication 463 treats engraving, packaging, insuring and mailing as incidental costs outside the limit, as long as they do not add substantial value to the gift.