Whether you are just starting a digital marketing campaign or thinking about hiring a marketing agency, one of the questions you might be asking is: "Is marketing tax-deductible?"
The answer is yes. The government allows you to deduct marketing expenses used to generate or keep customers.
Marketing and advertising expenses qualify as ordinary, reasonable, and necessary tax deductions. And they aren't a particularly tricky write-off as long as they are directly related to your business activities. This means that — when done right and with professionals — marketing and advertising can have a high return on investment (ROI).
Below, we'll break down what the Internal Revenue Service (IRS) considers marketing, plus provide marketing and advertising expense examples that are tax-deductible.
1. Website Expenses
One marketing expense you can write off on your taxes is the cost of creating and maintaining your business website, which includes:
- Designing, developing, and creating your website
- Website fees for hosting and maintenance
- Ongoing website content creation
Be sure to document all of the different accounts and companies you pay each month to deduct website expenses if you use more than one.
2. Marketing and Advertising Expenses
Is advertising a tax write-off? Yes. Here are some common marketing and advertising expenses examples that are tax-deductible:
- Marketing strategy and planning
- Content writing
- Sales enablement
- SEO services
- Email marketing
- Newsletters
- Graphic design and branding
- Display banner ad campaigns, excluding political sites
- Paid media marketing, including Google Ads or search pay-per-click (PPC) campaigns
3. Consultant or Marketing Agency Retainer
Are marketing services taxable? Actually, the costs of hiring a marketing agency or consultant to conduct any of the campaigns above or below can be written off on your taxes.
4. Social Media Expenses
Social media marketing tax deductions include:
- Paying a consultant, marketing agency, or anyone else outside your company to run your social media
- Content-creation expenses
- Fees to companies that manage your social media accounts
- Subscription-based social media sites like LinkedIn Pro
- Paid ad campaigns on LinkedIn, Facebook, Instagram, etc.
- Influencer marketing (this may require a 1099 contract depending upon the amount paid)
5. Technology and Marketing Software Expenses
Any customer relationship management (CRM) system, social scheduling tool, or marketing software is on the tax-deductible marketing expenses list. These monthly costs or annual subscriptions — which generally come with a discount — include software like:
- HubSpot
- Hootsuite
- Mailchimp
- Semrush
6. Print Advertising Expenses
Another type of advertising tax deduction is print advertising expenses, which include:
- Ad space in newspapers, magazines, or billboards
- Creation and printing of advertising materials like brochures, mailers, or business cards
7. Multimedia Advertising Expenses
Multimedia advertising expenses examples include ads on television or the radio.
8. Special Promotions
This type of advertising expense may include:
- Carrying out publicity campaigns
- Sponsoring a local event that exposes people to your business, such as paying to have your logo featured on a local sports jersey
- Hosting seminars, webinars, or workshops promoting your business's services
- Purchasing swag for clients, influencers, and staff to promote your brand, including promotional items like water bottles, t-shirts, and notebooks
Writing Things Off as Business Expenses: Marketing vs Selling
Business costs for both marketing and selling are deductible but in separate places on your business tax return.
For example:
- If you use your website for advertising, you may deduct web maintenance costs as an advertising expense.
- If you use your website for selling (you have a shopping cart, for example), this is a cost of selling and is considered separately.
- Costs for temporary signs are considered advertising.
- Costs for permanent signs (that last more than a year) are not advertising, but signs may be depreciated as long-term assets.
- Advertising as an indirect political contribution is not deductible.
- The cost of placing an ad on a vehicle is deductible, however, the cost of operating or driving the vehicle is not. Read more about what the IRS says about ads on vehicles.
- Costs for help-wanted ads are a deductible business expense, but they are not considered marketing or advertising.
- Donations to charities or non-profits are not a marketing or advertising expense. However, these expenses may be deductible in other areas of your business or personal tax return. Check with your accountant for further clarification.
Non-Tax-Deductible Marketing Expenses List
You can't deduct costs that are primarily personal or hobbies, even if they have some promotional value. For example, if your daughter is getting married and you invite some of your best clients to the wedding, you cannot deduct the wedding costs.
Similarly, you may not deduct costs of personal hobbies carried on with business associates, such as attending a NASCAR race with a client.
Examples of other marketing and advertisement expenses that are not tax-deductible are as follows:
- You cannot deduct advertising expenses associated with research and development activities.
- While you can deduct the cost of putting an advertisement for your business on your car (business or personal), you cannot deduct the cost of driving your car around town as an advertising expense. The IRS specifically discusses this subject, because it's misunderstood.
- You can't deduct the cost of advertising in any publication or website used by or for a political party or candidate. Advertising as an indirect political contribution is never deductible for businesses.
Frequently Asked Questions About Advertisement Tax Deduction
Is advertising tax deductible?
Like marketing expenses, many advertising-related expenses can be written off on your business taxes.
What is considered advertising for tax purposes?
Common examples of tax-deductible advertising expenses include:
- Costs of creating and running advertisements in various media, such as print, online, radio, or television
- Costs associated with distributing promotional materials or samples
- Expenses for trade shows and exhibitions to showcase your products or services
- Costs of printing business cards, brochures, and other promotional materials
- Website development and maintenance expenses
- Sponsorship or participation in community events or charitable activities that provide advertising benefits
- Promotional giveaways like branded merchandise or promotional items with your company logo
Are subscriptions tax deductible?
In many cases, subscriptions can be tax-deductible if they are considered ordinary and necessary for the operation of your business.
It's important to keep in mind that the IRS and tax authorities may have specific rules and limitations on the deductibility of subscriptions. Generally, to qualify for a tax deduction, the subscription should have a clear business purpose and be directly related to your trade or profession.
How much can you write off for marketing expenses?
The amount you can write off for marketing expenses as a tax deduction depends on several factors, including the nature of the expenses, the specific expenses in question, and the tax laws and regulations in your jurisdiction.
To ensure that you are correctly accounting for marketing expenses and maximizing your tax deductions, consult with a tax professional or accountant who is familiar with the tax laws in your jurisdiction.
Write Off Your Marketing Expenses and Save Money on Your Taxes
If you’re considering writing something off as a business expense, be sure to check with your accountant to learn what tax deductions and filings are right for your business.
If you plan your budget a year ahead, you'll want to include marketing as a necessary operating expense that you can deduct from your taxes. This will help you get into the mindset of investing in marketing for your business this year and for each year to come.
Ready to reach your revenue goals faster and have more to deduct from your bottom line? Start with our free checklist for creating a strategic and successful marketing budget.