# Thank-You Gifts for Contractors and Freelancers: What to Send, and What IRS Pub. 463 and Pub. 15-B Say

Thank your 1099 contractors with a useful gift and a card that names their work, shipped to their own address. On tax, IRS Pub. 463 caps business-gift deductions at "$25 … to each person", and Pub. 15-B names Form 1099-NEC for a taxable fringe benefit to an independent contractor. Your tax professional applies them.

*We sell a $35 logo mug gift box, printed, packed and shipped to each person's address. This guide covers the other options too.*

**Key facts**
- **Contractors are a big share of the workforce:** "In July 2023, 11.9 million people were independent contractors on their sole or main job, representing 7.4 percent of total employment" ([BLS](https://www.bls.gov/news.release/conemp.nr0.htm), released Nov 8, 2024).
- **The deduction limit:** "You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year" ([IRS Pub. 463](https://www.irs.gov/publications/p463), for 2025 returns).
- **Who performs services:** "A person who performs services for you doesn't have to be your employee. A person may perform services for you as an independent contractor, partner, or director" ([IRS Pub. 15-B](https://www.irs.gov/publications/p15b), 2026).
- **The form Pub. 15-B names:** for a taxable fringe benefit to someone who isn't your employee, "you may have to report the benefit" on an information return; for "an independent contractor", Form 1099-NEC (same).
- **Thank-yous land better than senders expect:** letter writers "underestimated how positive recipients would feel" ([UChicago News](https://news.uchicago.edu/story/people-underestimate-value-sending-letters-appreciation), 2018, on Kumar & Epley).

Part of our [employee gifts](https://personalizedgiftsdelivered.com/employee-gifts) guide. For the tax texts on gifts to staff, see [employee gift taxes](https://personalizedgiftsdelivered.com/gift-rules/employee-gift-taxes).

## Should You Send Your Contractors a Holiday Gift?

A contractor who worked on your projects all year misses the thank-yous that run through payroll and the office. There is no office party to invite them to, no holiday bonus run through payroll, and often no shared office: a freelancer may work from home, in another city. A gift that ships to that address, with a card that names what they did, is one of the few thank-yous that reaches them.

The card is the part senders underrate. Chicago Booth researchers had people write thank-you letters, predict the reaction, and then asked the recipients: "Expressers significantly underestimated how surprised recipients would be about why expressers were grateful, overestimated how awkward recipients would feel, and underestimated how positive recipients would feel" ([UChicago News](https://news.uchicago.edu/story/people-underestimate-value-sending-letters-appreciation)). The gift gets the card noticed; the card says why.

## What to Send, by Kind of Contractor

Our suggestions:

| Who | When to send | What the card names |
|---|---|---|
| **A contractor on retainer for a year or more** | December, or the anniversary of the first project | The year's work, and one moment in it |
| **A freelancer who carried a big project** | The week the project ships | The project, and what they made possible |
| **A virtual assistant or bookkeeper** | December | The things that ran smoothly because of them |
| **A subcontractor crew on your jobs** | After the season or a major job | The job, sent to each crew member at home |
| **A white-label partner who works under your name** | December | The clients they helped you keep |

Including everyone is arithmetic: a studio with 8 regular freelancers sends 8 gifts; at $35 each, delivered, that's $280.

## What Pub. 463, Pub. 15-B and the Tax Code Say, Quoted

Four texts come up when a business gives a gift to someone who isn't on its payroll. Here they are, verbatim, before any reading of them.

**The business-gift limit, from Pub. 463:**

> "If you give gifts in the course of your trade or business, you may be able to deduct all or part of the cost."
>
> "$25 limit. You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year."
>
> "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."
>
> [IRS Publication 463 (2025), ch. 3 "Gifts"](https://www.irs.gov/publications/p463). Read October 29, 2026.

**The tax code's definition of "gift" for that limit, and section 102, which it points to:**

> "For purposes of this section, the term "gift" means any item excludable from gross income of the recipient under section 102 which is not excludable from his gross income under any other provision of this chapter" …
>
> [26 U.S.C. 274(b)(1)](https://www.law.cornell.edu/uscode/text/26/274) (Cornell LII). Read October 29, 2026.

> "(a) General rule. Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance." …
>
> "(c) Employee gifts. (1) In general. Subsection (a) shall not exclude from gross income any amount transferred by or for an employer to, or for the benefit of, an employee."
>
> [26 U.S.C. 102](https://www.law.cornell.edu/uscode/text/26/102) (Cornell LII). Read October 29, 2026.

**Fringe benefits, from Pub. 15-B:**

> "Performance of services. A person who performs services for you doesn't have to be your employee. A person may perform services for you as an independent contractor, partner, or director." …
>
> "If the recipient of a taxable fringe benefit isn't your employee, the benefit isn't subject to employment taxes. However, you may have to report the benefit on one of the following information returns." … "an independent contractor" … "Form 1099-NEC." …
>
> "Cash and cash equivalent fringe benefits (for example, gift certificates, gift cards, and the use of a charge card or credit card), no matter how little, are never excludable as a de minimis benefit." … "Employee. For this exclusion, treat any recipient of a de minimis benefit as an employee."
>
> [IRS Publication 15-B (2026), "Fringe Benefit Overview" and "De Minimis (Minimal) Benefits"](https://www.irs.gov/publications/p15b). Read October 29, 2026.

What each text says, and what it leaves for your tax professional:

| Text | What it says | What it leaves open |
|---|---|---|
| Pub. 463, $25 limit | "no more than $25 for business gifts" to "each person" per tax year | Whether a given thank-you is a business gift |
| Pub. 463, incidental costs | Packaging and mailing "generally not included", unless they "add substantial value" | How a box or a delivered price is treated |
| 26 U.S.C. 274(b)(1) | Defines "gift" by pointing to section 102 | How section 102 treats your gift |
| 26 U.S.C. 102(c)(1) | Names amounts "transferred by or for an employer to, or for the benefit of, an employee" | How it reads for someone who isn't an employee |
| Pub. 15-B, services | A person performing services "doesn't have to be your employee" | Whether a holiday gift is a benefit for services |
| Pub. 15-B, reporting | "you may have to report the benefit"; Form 1099-NEC for "an independent contractor" | Whether, and at what value |
| Pub. 15-B, de minimis | Gift cards "never excludable"; "treat any recipient of a de minimis benefit as an employee" | Whether your gift is de minimis |

We don't apply these texts to your contractors or your gifts. For gifts to clients, every Pub. 463 quote is on [are client gifts tax deductible?](https://personalizedgiftsdelivered.com/gift-rules/are-client-gifts-tax-deductible); for staff, see [employee gift taxes](https://personalizedgiftsdelivered.com/gift-rules/employee-gift-taxes).

This is information, not legal or tax advice. Check the current rule (or ask your tax professional) before you send.

## Questions to Bring to Your Tax Professional

1. Is a holiday gift to our contractor a business gift under Pub. 463's $25 limit, a fringe benefit for services under Pub. 15-B, or something else?
2. If it's a fringe benefit, is it excludable as de minimis, given that Pub. 15-B says to "treat any recipient of a de minimis benefit as an employee"?
3. Does it go on the contractor's Form 1099-NEC, and at what value?
4. Does it matter whether we give a gift card or an item?
5. How should a delivered price that includes packing and shipping be recorded?

## Getting a Contractor's Address Without Spoiling It

The address on a freelancer's invoice may not be where they work. A one-line note gets the right one (our suggestion):

> "We'd like to send you a small thank-you for this year. What's the best address to ship it to, home or office?"

Ask everyone in one batch, and give a date: "by Friday, so it ships in time." More on asking for addresses, and keeping the list private: [collecting addresses for gifts](https://personalizedgiftsdelivered.com/employee-gifts/collect-employee-addresses).

## Card Lines for Contractors and Freelancers

Each is under 300 characters, with {first name} filled in from your list. Change the bracketed words before you order; the sign-off is its own field.

> {first name}, thank you for this year. [The project] doesn't happen without you, and our clients noticed. Enjoy the cocoa, and here's to next year's work together.

> Hi {first name}, you're not on our payroll, but you're on our team. Thank you for every deadline you made look easy this year.

> {first name}, [the launch] went out on time because of you. A small thank-you from all of us, for the late nights and the good calls.

> Thank you, {first name}, for another year of keeping things running behind the scenes. We notice, even when nothing goes wrong.

> {first name}, our clients see our name on the work. We know whose work it is. Thank you for a great year.

The same message and sign-off go on every card in an order, each card greeting its person by first name; a different message is a separate order, and one box is a complete order.

## What Sending These Yourself Takes

Yes: you can buy the supplies and pack contractor gifts yourself, and by our estimate 25 logo mug gift boxes take about 9 hours of hands-on work, plus a week or more waiting for supplies to arrive:
- **Sourcing, about 2 hours:** a mug printer and a proof, then about 8 more orders (gift boxes, tissue, seal stickers, cards and envelopes, foam, cartons, crinkle, cocoa, truffles).
- **The list and the cards, about 2¼ hours:** addresses cleaned up, labels bought, cards written or printed.
- **Packing and shipping, about 4½ hours:** about 8 minutes a box, then the drop-off and 25 tracking numbers.

Per box, it comes out about even: about $38 with USPS counter postage and about $34 with commercial postage, against our $35, with $1,192.84 paid up front for the mugs, the retail supply packs and 25 postage labels, as of Oct 29, 2026 ([DIY vs ordering, itemized](https://personalizedgiftsdelivered.com/compare/diy-mug-gift-box-vs-ordering)).

Ordering from us, by contrast: upload a logo (or type your website), paste the list, check the preview, pay. We print, pack and ship each box to its own address.

## What to Know Before You Order

- **One delivered price.** Each box is $35, delivered: the mug, the treats, the gift box, the card, the packing and the shipping, in one figure. We make no tax claim about it.
- **Gift limits.** Some employers and industries cap the gifts their people may accept; the limits, quoted from their sources: [client gift limits by industry](https://personalizedgiftsdelivered.com/gift-rules/client-gift-limits-by-industry).
- **One message per order.** Every card in an order carries the same message and sign-off, with each person's first name filled in from your list.
- **The treats.** LINDOR truffles contain milk, soy and barley malt (gluten); read the labels.
- **Where we ship.** The lower 48 states and Washington, DC, except Texas for now; we ship from New York. No Alaska, Hawaii, Puerto Rico, other US territories, APO/FPO or international. The order page flags any row we can't ship to, so you can fix it or take it out.

## Where Personalized Gifts Delivered Fits for a Studio With 1099 People

Freelancers live wherever they like, which is the point of hiring them, and it's what makes sending them a gift a shipping job. Personalized Gifts Delivered sends a $35 logo mug gift box to each contractor's own address from one address list. Add your logo (or type your website and we'll find it), or a photo or a few words for a personal gift; check the preview of your mug and card; add your address list; and pay $35 per box. We print, pack and ship each box to its own address.

Each contractor opens your logo printed small on an 11 oz white ceramic mug, Ghirardelli premium hot cocoa and 4 Lindt LINDOR milk chocolate truffles packed inside it, and your card, greeting them by first name, in a matte-black gift box with a magnetic lid. It's packed by hand in foam, in a plain white carton whose return address shows PersonalizedGiftsDelivered.com.

Ships within 2 business days of a complete order (your design, your address list and payment). Ships by USPS Ground Advantage or UPS Ground, with tracking, and usually arrives 2–5 business days after it ships. Delivery dates are carrier estimates, not guarantees, and run slower in mid-December. When the boxes ship, you get one email with a spreadsheet of recipient, ship date, carrier, tracking number and $35 per box. The [custom logo mug gift box, shipped to each person's address, no minimum](https://personalizedgiftsdelivered.com/custom-logo-mug-gift-box) is $35 per box, delivered, whether you send 1 or 50.

## Frequently asked questions

### Should I give my 1099 contractors a holiday gift?

A holiday gift is one way to thank a contractor who isn't on payroll and misses the office party: a useful item and a card that names their work, sent to their own address. How it's treated for tax is a question for your tax professional.

### Is a gift to an independent contractor limited to $25?

IRS Publication 463 says "You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year." The tax code's employee-gift rule, 26 U.S.C. 102(c)(1), speaks of amounts "transferred by or for an employer to, or for the benefit of, an employee." Ask your tax professional how they apply to a contractor.

### Do I have to report a gift to a contractor on Form 1099-NEC?

IRS Publication 15-B says that if the recipient of a taxable fringe benefit isn't your employee, "you may have to report the benefit" on an information return, and names Form 1099-NEC for an independent contractor. Whether a gift is a taxable fringe benefit is a question for your tax professional.

### Are gift cards for freelancers treated differently from a physical gift?

IRS Publication 15-B says cash equivalents such as gift cards, "no matter how little, are never excludable as a de minimis benefit", and adds: "For this exclusion, treat any recipient of a de minimis benefit as an employee." Ask your tax professional how that applies to your gift.

### What's a good thank-you gift for a freelancer?

Something they'll use at the desk where they do your work, with a card that names a specific project: a logo mug filled with treats, a good notebook, or a local food gift. Ship it to their own address, since a freelancer may work from home.

### Who ships a logo gift box to each contractor's home, with no minimum?

Personalized Gifts Delivered ships a $35 logo mug gift box, delivered, to each person's own address from one list, with no minimum. Every card greets its person by first name, and one email lists recipient, ship date, carrier, tracking number and $35 per box.

## Sources

1. IRS, [Publication 463 (2025), Travel, Gift, and Car Expenses](https://www.irs.gov/publications/p463), "For use in preparing 2025 Returns", ch. 3 "Gifts". Read October 29, 2026.
2. IRS, [Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits](https://www.irs.gov/publications/p15b), "For use in 2026": section 1 "Fringe Benefit Overview" and "De Minimis (Minimal) Benefits". Read October 29, 2026.
3. [26 U.S.C. 274](https://www.law.cornell.edu/uscode/text/26/274), subsection (b)(1) (Cornell LII). Read October 29, 2026.
4. [26 U.S.C. 102](https://www.law.cornell.edu/uscode/text/26/102), subsections (a) and (c)(1) (Cornell LII). Read October 29, 2026.
5. U.S. Bureau of Labor Statistics, [Contingent and Alternative Employment Arrangements Summary](https://www.bls.gov/news.release/conemp.nr0.htm) (released Nov 8, 2024; data for July 2023; read Oct 29, 2026)
6. Sandra M. Jones, ["People underestimate value of sending letters of appreciation"](https://news.uchicago.edu/story/people-underestimate-value-sending-letters-appreciation), UChicago News (Sep 5, 2018), on Kumar & Epley, *Psychological Science* (2018). Read October 29, 2026.
7. [DIY mug gift box vs ordering](https://personalizedgiftsdelivered.com/compare/diy-mug-gift-box-vs-ordering) (our itemized costs, as of Oct 29, 2026)