Generally when an employer gives a gift to an employee the value of the gift is taxable income to the employee and tax deductible as wages to the employer. These gifts must be processed properly through payroll and reported on the employee’s annual Form W-2 as taxable wages. There are a few exceptions to this general rule and even specialized websites that can help employers give smaller gifts to their employees without creating taxable income for the employee and yet retaining the business tax deduction for the employer. Here is a helpful, readable article on the topic.