How Many Gift Cards Can Employers Give to Their Employees?
As we head into a new year, many of us are looking for ways to show appreciation and gratitude to our employees. One way is by giving them gift cards. But how many can you give? Before we give you the answer, there are a few questions you need to consider.
How much money can a person receive as a gift without being taxed?
Since gift cards can be redeemed like cash, employees need to report gift cards as part of their taxable income. For employers, however, gift cards up to $25 are tax-deductible and must be reported on employee W-2s. Employers should report all gift cards above $25 on their taxes.
Is there a limit to the number of gift cards I can give every year?
You’re probably thinking now that you might save a lot of money for your company if you start handing out gift cards to employees for every occasion. And you are correct-to a point.
There are no restrictions on the number or value of gift cards that your company can distribute, but you must follow your company’s rewards and recognition guidelines. Those guidelines differ from company to company, so take care. In theory, you can give each employee a $50 gift card every day of the year. However, the IRS would almost certainly look at this suspiciously, and it would be difficult to explain why the insignificant gain wasn’t part of a compensation or benefit-in-kind.
Gift cards as rewards and incentives: six best practices
When offering gift cards as gifts or bonuses, it’s crucial to understand these guidelines to ensure that your gift cards are well-received.
Separate gifts from compensation
For a gift to be truly rewarding, make it clear to your employees that these gifts are separate from any holiday bonuses or boosts in compensation they may receive. Rather, it’s an unexpected token of gratitude for their hard work all year long. Having the gift as an unexpected reward will surprise and delight your recipients much more than an expected bonus or salary increase.
Where possible, give prepaid cards or multi-brand gift cards
While everyone likes the popular single-brand gift cards, your employees love having more choice. Prepaid cards can be redeemed almost anywhere, and multi-brand gift cards-like our exclusive Blackhawk Originals™ cards-can be redeemed at 5-8 selected brands per card.
Use your gift cards to add a personal touch
Give gift cards a special touch to bring your company towards the next stage. Rather than just randomly handing out Starbucks gift cards, choose one as if it were a gift for anyone you love. If you know someone on your team is having a child, moving to a new location or planning a dream holiday, personalize your gift card selection to reflect who they are and what they need right now.
Reduce the number of options available
If there are too many options, your gift card rewards program may be hampered. It’s possible to overwhelm people with an abundance of endless options. Match your gift card offers or rewards to your organization’s principles to provide your employees more of a customized experience. Blackhawk Network offers our exclusive Choice cards, for example-multi-brand gift cards with curated themes that can be aligned with your company’s intent.
Match the value to the brand
Gift cards, as previously said, are adaptable. Although gift cards allow you to choose from a variety of amounts, you must ensure that the gift card value matches store requirements. If the value of the card is too small to make a purchase, it’s not a gift anymore, it’s a chore.
Gift cards should be accompanied by clear acknowledgment and gratitude
Our best advice is to match your gift cards with specific acknowledgments. If you combine gift cards with gratitude, you can significantly speed up the incentive program while also increasing employee commitment and involvement. Giving gifts is wonderful, but it can seem hollow or superficial if it isn’t accompanied by some thought and gratitude.
Do you want to buy gift cards in bulk for your employees?
Blackhawk Network is the industry leader in employee prepaid cards and gift cards throughout the United States. We offer a full portfolio of comprehensive gift cards unsurpassed in the industry-all the options you need-including cards that are exclusively ours. Just click here to get started or call 866.353.4877.