Tax-Friendly Tips for Client Gifts This Holiday Season

The holidays are here, and you’re probably thinking about how to show some love to your amazing clients. A thoughtful gift is a perfect way to say “thank you” for their loyalty and support—but before you go all out, let’s talk about how client gifts can impact your taxes. Yes, even those small tokens of appreciation come with IRS rules!

Here’s a quick guide to help you gift smart this season:

🎁 Client Gift Tax Deduction Basics

Here’s the deal: the IRS allows you to deduct up to $25 per client, per year on gifts. So, while you can absolutely go above and beyond to make your clients feel appreciated, keep in mind that only $25 of the cost is tax-deductible.

This limit is set to prevent businesses from sneaking in non-deductible expenses under the guise of “gifts.” It might seem low, but don’t worry—you can still create meaningful, memorable gifts within this budget!

💡 Creative Ways to Gift Within the $25 Limit

Here are some ideas to make your gifts feel special without breaking the bank—or IRS rules:

1. Personalized Items
   Nothing says “I appreciate you” like a personal touch! Custom mugs, mini essential oils, or stylish tote bags are thoughtful and affordable options.

2. Branded Goodies
   Gifts like reusable bags, water bottles, or mini candles with your logo can double as a thank-you and a subtle marketing tool.

3. Service Discounts or Vouchers
   While these aren’t technically deductible as gifts, offering a discount or voucher for your services can be a great way to treat your clients and encourage repeat visits.

🚫 What NOT to Gift

Not all gifts are created equal when it comes to taxes. Here’s what to avoid:

• Entertainment Gifts:
  Movie tickets, concert tickets, and other entertainment-related gifts are no longer deductible, even if they’re part of your client appreciation efforts.

• Cash or Gift Cards:
  These are often treated as compensation rather than gifts, making them subject to different tax rules. They’re also not deductible under the $25 gift limit.

Stick to tangible, thoughtful items to keep your finances simple and tax-compliant.

🌟 Extra Tip: Promotional Items Can Be a Win-Win!

If the gift you’re giving includes your branding—like hats, pens, or other merchandise with your logo—it might qualify as an advertising expense instead of a gift. Advertising expenses don’t fall under the $25 limit, which can give you a bit more flexibility. Talk to a tax professional to see what qualifies.

🎉 Final Thoughts

Client gifts are an excellent way to show appreciation and strengthen relationships, but staying within IRS guidelines is key. With a little creativity, you can create meaningful gifts that your clients will love—and that won’t cause headaches come tax season.

Need more help navigating your beauty business finances? My course, Pretty Profitable, is packed with simple strategies to make your bookkeeping a breeze and your bottom line shine. Check it out to stay on top of your business and make every dollar count.

Happy gifting (and tax-smart shopping)!

xo, Meagan
Solo Beauty Pros