Formal Rewards Taxation Issues

Income Tax on Employee Recognition Awards

All cash awards, including gift certificates for a specific dollar amount, or any other cash equivalent, are subject to income tax. Examples are cash, savings bonds, and monetary gift certificates that do not indicate the merchandise (regardless of whether or not cash can be received back).

Non-cash awards, such as plaques, certain certificates, tickets, small gifts, and meals that do not exceed $75.00 in value per recipient per year are not taxable income. Examples are gift certificates to a movie theatre or dinner, flower arrangements, fruit baskets, athletic tickets, etc. A gift certificate is considered "de minimis", and therefore non-taxable, when the gift certificate is for specific merchandise, e.g. a Thanksgiving turkey. It must specify the exact merchandise and not a dollar amount. Please reference the Manual of Business Procedures for more information on gifts to employees.

If you have additional questions on tax issues related to such awards, contact the Payroll Office at 355-5010.