Happy Friday! Cooper here.

At Tannery Company, we know that your clients are at the heart of your business.

The relationships you build with them can shape your success—and what better way to show appreciation than with a thoughtful gift?

But before you stock up on gourmet baskets or monogrammed tumblers, let’s talk about how to ensure your generosity is also smart business.

Understanding client gifts and their tax deductibility is key to making sure your appreciation doesn’t come with an unexpected cost.

We’re here to guide you through the rules, so you can make the most out of every gift.

What Counts as a Client Gift?

Client gifts can range from small tokens like a branded mug to more extravagant gestures like a luxurious fruit basket. But did you know that some common gift items, such as gift cards, aren’t considered deductible under IRS rules? Only physical, tangible gifts qualify for deductions—so keep that in mind when choosing what to give.

The $25 Rule: What You Need to Know

Here’s the main thing to remember when it comes to client gifts:

the IRS allows a deduction of up to $25 per person per tax year.

While this may seem limiting, the good news is that incidental costs like shipping, engraving, or gift wrapping don’t count toward this limit. These extras are considered part of the presentation and can be deducted separately.

To make the most of this, be sure to keep detailed records of every gift you give—note the recipient, the occasion, and the cost.

Avoid These Pitfalls

• Entertainment is not a gift: Taking a client to a concert or game falls under entertainment expenses, which are not tax-deductible. So, if you’re aiming for a deduction, stick with tangible items instead.
• Promotional items: If you’re handing out branded items like pens or notepads in bulk, you’re in the clear. These items are considered promotional and can be deducted even beyond the $25 limit.

How to Maximize Your Deduction

Here are a few tips to make sure your client gifts work for both your business relationships and your bottom line:

• Stick to gifts that strengthen your relationships while staying under the $25-per-person cap.
• Avoid giving cash-equivalent gifts, like gift cards, if you want to maximize your deduction.
• Always keep track of who you’re gifting to and what you’re spending.

Giving thoughtful gifts is a great way to nurture client relationships, and by following these guidelines, you can do so while staying tax compliant. At Tannery Company, we’re here to help you grow your business, one smart decision at a time.

Ready to Give with Confidence?

If you’re looking to get the most out of your client gifts, we’re here to guide you every step of the way. Let’s talk about how you can optimize your gift-giving strategy and build lasting relationships without leaving money on the table.

Reach out to us at team@tannerycompany.com