Can I Deduct Gifts to Business Clients?

Sending gifts to clients and business contacts is a common way to build relationships, and the IRS does allow a deduction for it, within a strict limit. The business gift deduction is capped at $25 per recipient per year, which has not been updated since 1962. This means even a modest gift basket may only be partially deductible. Incidental costs like gift wrapping and engraving generally do not count toward the $25 limit. Keep records that show who received each gift, the business relationship, and the cost so you can support the deduction if the IRS ever asks.