The Internal Revenue Service hasn’t issued comprehensive guidance on how the estimated 27 million Americans earning income as influencers should report their income and expenses on their tax returns. That’s leaving people who either make a living or supplement their income by endorsing products and services on social media platforms such as Instagram and YouTube – and their accountants – unsure about the tax consequences of their income and expenses, or what kinds of deductions are legitimate for people in their line of work.
We, two accounting scholars, published this finding and other things we discovered about the taxation of content creators in the Journal of Accountancy in the fall of 2024.
We found that the tax treatment of the free products many influencers get in the course of doing their job is especially ambiguous, leaving them unaware of how to correctly file their tax returns.
While some tax experts argue that freebies, whether they’re objects such as running shoes and headphones or services such as a luxury hotel stay, should be treated as taxable income. Other tax professionals say free goods and services are typically gifts, not income.
For our research we analyzed tax laws, researched various accounting firms specializing in influencer clients and examined IRS guidance that offers tax advice to accountants and influencers. While specific audits of social media influencers for nondeductible lifestyle expenses are not publicly documented due to confidentiality, there are common areas where influencers may face scrutiny from tax authorities.
The IRS issued its most relevant guidance in 2006, when it advised entertainers and celebrities who receive “swag bags” containing pricey gifts at the Oscars and other high-profile award ceremonies. Other guidance is based on commonly accepted tax rules for business deductions and income recognition.
The IRS confirmed that items received this way constitute taxable income that must be reported based on their fair value. This advice offered a starting point for influencer tax rules. In our view, that guidance does not clear up a growing area of uncertainty that affects millions of people and countless companies.
Why it matters
Following years of rapid growth, the influencer industry has an estimated market value of more than US$23 billion in 2025. Some experts predict that it will reach $71 billion by 2032 as brands spend billions more on their partnerships with influencers.
Ideally, all influencers would sign contracts with their business partners outlining the terms of their compensation. In reality, companies send stuff or provide free services to influencers without agreeing with them about anything in advance.
While the IRS allows gifts to be excluded from income, many influencers receive unsolicited items that generally don’t qualify as gifts. That’s because a true gift requires nothing expected in return.
In contrast, when influencers get freebies, they’re often expected to promote or acknowledge those products or services on social media. When influencers get things they don’t use, returning them is their best course of action in terms of their possible tax liability.
Otherwise, those items they didn’t ask for could constitute income they must report unless the items are considered de minimis – very low value – fringe benefits.
In influencer marketing, this guideline allows influencers to exclude low-cost products or services from their income if their value is too small to track. Frequently receiving many low-value goods or services from the same business, however, could constitute taxable income.
Influencers’ expenses are also hard to assess because they use many purchases for both personal and business purposes. And business expenses can be deducted on a tax return but not personal ones.
The tax code is especially strict when it comes to apparel, unless it’s used exclusively for business purposes. This leaves influencers unsure about what they should do when they purchase, say, a cashmere scarf that they promote on TikTok but also wear when they go on errands without any promotional activities. Would that scarf be partially deductible? Not deductible at all? The IRS hasn’t said enough for us – or anyone else – to answer this question.
Influencers must track everything they get for free and all their work-related expenses paid during the year. Creating a simple record-keeping system tracking for all goods and services received will simplify tax filing. There are some apps for that.
What still isn’t known
Neither the IRS nor Congress has indicated whether any guidelines, regulations or laws that would clarify the rules governing influencer taxation are in the works. It’s also unclear when IRS audits of influencers or relevant tax court cases are underway.
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The University of Dayton is a partner organization with The Conversation.
Kaitlin Newkirk does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
