Many business owners might not be aware of this, but gifts that your business gives out to vendors, customers, or other business associates are only tax deductible up to $25 per year, per recipient. This means that if you were thinking of passing out expensive bottles of wine (or tequila if you were thinking of sending your favorite CPA a gift! 😉 from your business, you would only be able to deduct $25 for each bottle on your tax return.
There are some exceptions to this $25 rule that will allow you to deduct the cost of gifts fully:
- Any item that costs $4 or less and has the giver’s name imprinted on it – think pens, swag bags, etc.
- Signs and promotional materials for the recipient to use on their business premises.