Bonuses, Gifts & Holiday Parties: What’s Deductible and What’s Not
Monday, November 03, 2025
The holidays are a time to celebrate your team, thank your clients, and spread a little cheer. But before you go dashing through the snow with your business credit card, it’s important to know what the IRS considers deductible and what’s just festive fun on your dime.
Here’s a cheerful breakdown to keep your holiday spending tax-smart:
Employee Bonuses
- Deductible? ✅ Yes! Cash bonuses to employees are considered taxable wages, meaning they’re deductible to the business. Just remember they’re also subject to payroll taxes.
- Not deductible? ❌ Gifts of cash or gift cards are always treated as taxable wages (not de minimis), so they don’t get a free pass.
Festive Tip: A holiday bonus can be a great morale booster and a deduction if handled correctly through payroll.
Employee Gifts
- Deductible? ✅ Yes, with limits. Small, “de minimis” gifts (like a fruit basket, a bottle of wine, or company swag) are deductible and generally not taxable to employees.
- Not deductible? ❌ Lavish gifts or anything with significant cash value could be considered compensation and must be taxed accordingly.
Festive Tip: Think thoughtful, not extravagant. A personalized gift often means more than a pricey one.
Holiday Parties
- Deductible? ✅ Yes, if the whole team is invited. Office holiday parties are 100% deductible when they’re for the benefit of employees.
- Not deductible? ❌ Exclusive events for just owners or highly-compensated employees don’t qualify. Client-only parties typically fall under the 50% meals/entertainment rule or may not be deductible at all.
Festive Tip: Invite everyone, keep it inclusive, and your holiday cheer doubles as a tax deduction.
Client Gifts & Entertainment
- Deductible? ✅ Yes, up to $25 per client, per year.
- Not deductible? ❌ Entertainment is not deductible (sorry, no tax write-off for that courtside NBA ticket). Meals with clients may qualify for a 50% deduction if directly related to business discussions.
Festive Tip: Pair a modest client gift with a handwritten card. It leaves a lasting impression without busting IRS limits.
The Bottom Line
The IRS may not hand out candy canes, but they do allow certain holiday expenses to be deducted, if you follow the rules. Bonuses through payroll, modest employee gifts, and inclusive holiday parties are all deductible ways to spread cheer. Lavish gifts or client entertainment? Not so much.
At J&S Accounting, we help business owners navigate the fine print so you can stay festive and financially smart. Have questions about what qualifies? Contact us today before you start decking the halls.
About J&S Accounting
At J&S Accounting, we provide expert bookkeeping services tailored to the unique needs of small businesses and nonprofits. We recognize the challenges that come with maintaining accurate financial records and how vital this is for the smooth operation and growth of your business. As a woman and minority-owned firm, we’re proud to offer our expertise to businesses in Savannah, GA, and across the nation, helping them navigate financial complexities and achieve better financial management.
More Articles
The holiday season isn’t just about twinkling lights and peppermint mochas—it’s make-or-break time for many small businesses. Whether you rely on holiday sales for the bulk of your revenue or just see a seasonal boost, smart financial planning can mean the difference between record profits and post-holiday regrets.
We’re now 29 days into the government shutdown, and many business owners, especially those in the small business and nonprofit sectors, are starting to feel the effects. When federal systems pause, the impact extends far beyond Washington, D.C. It touches real organizations, real budgets, and real people trying to keep things running.
The end of the year always sneaks up faster than we think. Between holiday sales, family commitments, and wrapping up projects, many small business owners push tax prep to the back burner until January. But waiting until the last minute can cost you, not only in stress, but also in missed opportunities for deductions and savings.
CUSTOMER TESTIMONIALS
What others are saying about us
" I could not recommend this company enough!"
The team at J&S Accounting are like working with trusted friends that you have had for a long time. Janel has personally walked me through my first year with QuickBooks as a small business owner, and has made it so easy and enjoyable. She is very professional, knowledgeable, and is always so affirming of how well I am doing. She really takes her time and you can tell that she cares about her customers and wanting them to feel confident about their business finances. I could not recommend this company enough!
- Kelsey H.
"The level of professionalism and commitment to supporting small businesses like mine is unmatched."
If I could give J&S 6 stars I would because they go the extra mile every time! I am so glad I found J&S Accounting. The level of professionalism and commitment to supporting small businesses like mine is unmatched. I am so grateful for J&S. I highly recommend!
"Their customer service and individualized care have remained top tier and we gladly recommend their services."
J & S Accounting has made such a huge impact in our day to day operations at Kicklighter Resource Center. They are very hands on and truly take the time to educate us, whether in person or through trainings and tutorials. Their customer service and individualized care have remained top tier and we gladly recommend their services.
- Jay Ahnee
© 2023-2025 J&S Accounting and Tax Services LLC, dba J&S Accounting.
All Rights Reserved
Disclaimer:This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.
© 2023 J&S Accounting. All Rights Reserved.
Disclaimer
This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.