Gifts: Business Travel and Vehicle Expenses (2025 IRS Guide)

This guide covers “Gifts” within business travel and vehicle expenses. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 463 (2025), Travel, Gift, and Car Expenses, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Gifts

If you give gifts in the course of your trade or business, you may be able to deduct all or part of the cost. This chapter explains the limits and rules for deducting the costs of gifts.

$25 limit.

You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift.

If you give a gift to a member of a customer’s family, the gift is generally considered to be an indirect gift to the customer. This rule doesn’t apply if you have a bona fide, independent business connection with that family member and the gift isn’t intended for the customer’s eventual use.

If you and your spouse both give gifts, both of you are treated as one taxpayer. It doesn’t matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. If a partnership gives gifts, the partnership and the partners are treated as one taxpayer.

Example.

You sell products to a local company. You and your spouse gave the local company three gourmet gift baskets to thank them for their business. You and your spouse paid $80 for each gift basket, or $240 total. Three of the local company’s executives took the gift baskets home for their families’ use. You and your spouse have no independent business relationship with any of the executives’ other family members. You and your spouse can deduct a total of $75 ($25 limit × 3) for the gift baskets.

Incidental costs.

Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit.

A cost is incidental only if it doesn’t add substantial value to the gift. For example, the cost of gift wrapping is an incidental cost. However, the purchase of an ornamental basket for packaging fruit isn’t an incidental cost if the value of the basket is substantial compared to the value of the fruit.

Exceptions.

The following items aren’t considered gifts for purposes of the $25 limit.

1. An item that costs $4 or less and:

   1. Has your name clearly and permanently imprinted on the gift, and

   2. Is one of a number of identical items you widely distribute. Examples include pens, desk sets, and plastic bags and cases.

2. Signs, display racks, or other promotional material to be used on the business premises of the recipient.

Figure B. When Are Transportation Expenses Deductible?

Most employees and self-employed persons can use this chart. (Don’t use this chart if your home is your principal place of business. See Office in the home, later.)

Figure B. When Are Transportation Expenses Deductible?

Figure B. When Are Transportation Expenses Deductible?

Summary: This illustration depicts the rules used to determine if transportation expenses are deductible.

• Between home and regular or main job, Never deductible.
• Between home and temporary work location, Deductible if you have a regular or main job at another location.
• Between home and second job, Never deductible on a day off from regular or main job.
• Between regular or main job and temporary work location, Always deductible.
• Between regular or main job and second job, Always deductible.
• Between temporary work location and second job, Always deductible.

The image then lists definitions for words used in the graphic:

• Home: The place where you reside. Transportation expenses between your home and your main or regular place of work are personal commuting expenses.
• Regular or main job: Your principal place of business. If you have more than one job, you must determine which one is your regular or main job. Consider the time you spend at each, the activity you have at each, and the income you earn at each.
• Temporary work location: A place where your work assignment is realistically expected to last (and does in fact last) one year or less. Unless you have a regular place of business, you can only deduct your transportation expenses to a temporary work location outside your metropolitan area.
• Second job: If you regularly work at two or more places in one day, whether or not for the same employer, you can deduct your transportation expenses of getting from one workplace to another. If you don’t go directly from your first job to your second job, you can only deduct the transportation expenses of going directly from your first job to your second job. You can’t deduct your transportation costs between your home and a second job on a day off from your main job.

Gift or entertainment.

Any item that might be considered either a gift or entertainment will generally be considered entertainment. However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift.

Caution:

If you are entitled to a reimbursement from your employer but you don’t claim it, you can’t claim a deduction for the expenses to which that unclaimed reimbursement applies. This type of deduction is considered a miscellaneous deduction that is no longer allowable due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a).

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 463 (2025), Travel, Gift, and Car Expenses: Gifts — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.