Do Influencers Pay Taxes on Gifts?

When a company sends a product to an influencer, it is often described as a “gift.” However, for tax purposes, the Internal Revenue Service (IRS) does not see it that way. These items, whether skincare products, new electronics, or all-expenses-paid trips, are considered taxable income.

The reason for this distinction is the business context. Brands provide these products with the expectation of promotion or in exchange for services, even if an explicit contract does not exist. This exchange transforms the item from a simple present into a form of payment for services.

Determining if a Gift is Taxable Income

The taxability of a “gift” received by an influencer hinges on the IRS’s definition of a true gift. For an item to be considered a gift, it must be given out of “detached and disinterested generosity.” This standard, established in the Supreme Court case Commissioner v. Duberstein, means the person giving the gift expects nothing in return. A birthday present from a family member is a clear example, as it is given out of personal affection.

When a brand sends a product to a content creator, this standard is rarely met. The company’s motive is commercial, as they are seeking publicity, brand exposure, or a business relationship that will lead to future promotion. Even without a formal contract, the underlying intent is for the item to be seen by the influencer’s audience. This implicit expectation of an exchange is what classifies the item as income.

This principle applies regardless of whether the influencer ultimately features the product. The act of a business sending an item to an influencer for promotional consideration is enough for the IRS to view it as a barter transaction. For instance, if a tech company sends new headphones to a reviewer, the value of the headphones is income because the company anticipates a review or mention.

If an influencer receives unsolicited products they do not intend to promote, the safest course of action is to return them. Accepting and keeping the items can imply an agreement to the unstated terms of the exchange, making the value of the products reportable income. This step helps maintain a clear line between personal gifts and professional compensation.

Valuing the Gifted Item for Tax Purposes

Once it is established that a gifted item is income, the next step is to determine its monetary value for tax reporting. The standard used by the IRS is the Fair Market Value (FMV), which is the price that an item would sell for on the open market. This is what a willing buyer would pay to a willing seller for that product or service.

For most products, determining the FMV is the retail price of the item at the time it was received. An influencer can find this value on the brand’s website or through an online search. If a clothing brand sends a jacket that sells for $200, the influencer has received $200 of income. For services, such as a complimentary hotel stay, the FMV is the normal cost of that booking.

The valuation can be more complex for pre-release items not yet available to the public. In these situations, the influencer must make a reasonable estimate of the value. This could be based on the price of a similar product or by asking the brand for the anticipated retail price. It is wise to document how the value was determined in case of an IRS inquiry.

A narrow exception to this rule is the de minimis fringe benefit. This applies to property or services with a value so small that accounting for it would be unreasonable. While the IRS does not set a specific dollar threshold, it has indicated that items with a value of $100 or more do not qualify. This exception is reserved for occasional, low-value items and would not apply to most products sent for promotion.

Required Tax Documentation and Record Keeping

Properly managing tax obligations begins with meticulous record-keeping. For an influencer, this means tracking every product received from a brand that constitutes income. The most effective method is to maintain a detailed spreadsheet.

This log should include the following for each item:

• The date it was received
• The name of the brand or PR agency that sent it
• A clear description of the product or service
• Its determined Fair Market Value (FMV)

As the year progresses, companies that have provided an influencer with $600 or more in products or services are required to send a Form 1099-NEC, “Nonemployee Compensation.” This form reports the total value of compensation paid to the influencer. Upon receipt, the influencer should compare the amount on the 1099-NEC with their own records to ensure accuracy.

Even if an influencer does not receive a 1099-NEC from a brand, the income must still be reported. The responsibility to report all income rests with the taxpayer, not the company providing the compensation.

Reporting Gifted Items on Your Tax Return

After tracking the FMV of all gifted items, the final step is to report this income on a tax return. The total value of all products and services received is considered business revenue. This aggregate amount is entered on Form 1040, Schedule C, “Profit or Loss from Business,” on the line for “Gross receipts or sales.”

The figure reported on this line should be the sum of all FMVs recorded in the influencer’s spreadsheet, along with any cash payments. The Schedule C calculates the net profit or loss of the business by subtracting any deductible business expenses from this gross income.

Reporting this value as income has direct tax consequences. The net profit calculated on Schedule C flows to the personal tax return, Form 1040, where it is subject to income tax. The tax rate depends on the influencer’s total taxable income and filing status.

This income is also subject to self-employment tax, which is calculated on Schedule SE. This tax covers Social Security and Medicare taxes for self-employed individuals. For 2025, the self-employment tax rate is 15.3%. This consists of a 12.4% Social Security tax on the first $176,100 of net earnings and a 2.9% Medicare tax on all net earnings.