Are gifts and merchandise sent by brands taxable?

Products and merchandise sent by brands to YouTubers in exchange for promotion — or with the expectation that the creator will feature, review, or discuss the product — are generally not true gifts under the tax code. They are compensation received in a non-cash form. The IRS requires the fair market value of such items to be included in income in the year they are received, regardless of whether a formal payment agreement exists.

If the creator uses the product in producing content — a camera for a sponsored unboxing, skincare products reviewed on camera, software demonstrated in a tutorial — a portion of its fair market value may be deductible as a business expense in the same year. The deductible portion is limited to the business-use percentage. A product used exclusively for a single sponsored video and never personally retained is arguably 100% business-related; a product kept and used personally after the review has mixed allocation.

The more fact-specific scenario involves unsolicited PR packages — products sent without a formal agreement and without any expectation of coverage. The tax treatment depends on whether an arrangement existed, whether the creator ultimately covered the product, and the surrounding facts. The IRS's general principle is that income arises when property is received as payment for services or in expectation of services. Creators who receive significant volumes of PR packages should document what was received, when, and under what arrangement. IRS Publication 334 covers the ordinary-and-necessary expense standard.

This is general tax information, not tax advice. Your situation may differ; consult a licensed CPA before making tax decisions.