Are Employee Holiday Gifts Tax Deductible in 2025?

KEY TAKEAWAYS

• Understand what counts as a deductible gift
• Discover how other countries approach holiday gifting 
• Learn about getting the most from holiday gifting in 2025 and into 2026

As the holiday season is coming closer, businesses and employers are looking for ways to appreciate and thank their employees. And a great way to do it is holiday gifting. 57% of employees see a gift as a sign of their employer’s gratitude and appreciation. Yes, it’s true, and this is still a thing in many workplace cultures in the U.S. and UK. 

From gift cards to holiday treats to service awards, options are plentiful. But not all gifts are treated equally by the IRS and HMRC. The tax implication depends on factors like the type and value of the gift. 

Understanding these distinctions can help avoid costly tax surprises for both the business and the team. Let’s continue with the article to know more about it. 

Understanding What Counts as a Deductible Gift

First, let’s clarify what is recognized as a deductible gift in the United States and the United Kingdom.

United States: Small Non-cash Gifts Still Work

In the US, the IRS continues to view low-value, irregular gifts as de minimis benefits. These are generally deductible for employers and not taxable for workers. 

According to data provided by Investopedia, items like chocolates, holiday food, branded mugs, or seasonal desk products are generally okay because they are affordable and infrequent. 

Cash or cash-related gifts, such as prepaid cards, stay fully taxable.

To keep things straightforward, many employers focus on: 

• Non-cash things that feel personal 
• Gifts that are not tied to performance 
• Reliable documentation of what was given

United Kingdom: The £50 Trivial Benefit Rule

In the UK, the HMRC trivial advantage rule remains the central standard. Employers can give gifts tax-free when every item costs £50 or less, is not cash or a voucher, and is not given as a bonus for work. 

If a gift surpasses the £50 limit or has any connection to performance, it becomes taxable and may need to be recorded or covered through a PAYE Settlement Agreement.

For many companies, the most reliable method is to choose modest, non-cash festive things that feel thoughtful without exceeding the threshold. 

Seasonal items like Successories’ corporate holiday gifts work quite well here, as they provide festive encouragement while staying comfortably within what HMRC defines as a trivial benefit.

Some teams even address wellness-oriented ideas, similar to how Medterra encourages calming sleep gummies, giving workers something thoughtful that supports rest and well-being during a busy season.

How Other Countries Approach Holiday Gifting

Now, let’s take a quick look at some other nations.

In many other countries, the broad themes are quite equal, even though the terminology differs. 

For example, Australia usually treats small, non-cash Christmas gifts as small benefits, and Canada has value-based limitations that determine when a gift turns taxable. 

The most prevalent thread is that modest, casual gifts that are not linked to performance typically remain deductible or at least non-taxable for staff members.

To provide a sense of international tradition, many countries differentiate between gifts that promote goodwill and those that serve as disguised bonuses. The more stringent view almost always refers to cash or high-value items.

Getting the Most from Holiday Gifting in 2025 and into 2026

Holiday gifts do much more than tick a compliance box. They support team morale, help create a positive environment, and build a sense of shared celebration. 

The tax treatment is just an extra element to manage. 

Many businesses share exclusive blog posts or staff reports explaining how and why they prefer seasonal gifts, which helps workers understand both the gesture and the idea behind it.

As you prepare your 2025 gifting, keep an eye on local regulations, stay within value limits, and pick items that feel meaningful without becoming taxable. 

When in confusion, a quick check with your financial planner can help keep the season lighthearted and compliant.

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