The rise of influencer marketing has transformed the way brands engage with consumers—and how individuals earn a living. In 2024, the global influencer marketing industry is projected to hit $24 billion, with U.S. brands alone spending over $7 billion. Despite the size of the industry, the IRS has yet to release detailed guidance on how influencers should report income or claim expenses, leaving many content creators and their tax advisers uncertain about what is—or isn’t—taxable. As influencers continue to grow in number and financial impact, understanding the tax implications of brand partnerships and gifted products is essential.
When Gifts Become Income
Whether you’re a fashion blogger receiving the latest jacket, a tech reviewer unboxing new headphones, or a travel vlogger offered a free hotel stay, the question remains the same: is it taxable? The answer depends on context. If there’s an agreement—formal or implied—that you will promote, review, or post about the product in exchange for receiving it, then the IRS typically views the product as taxable income. This is true even if no cash is exchanged. Compensation in the form of goods or services is still compensation.
Influencers with formal contracts have a clearer tax path. For example, if a golf blogger is paid $10,000 and provided free travel and lodging in exchange for covering a tournament on their platform, all of that value is taxable. These creators will often receive Form 1099-NEC from the company, but even if they don’t, they are still required to report the full fair market value of everything received as income.
Unsolicited Products: A Tax Gray Area
Where things get more complicated is with unsolicited gifts. Many influencers receive free items without any formal agreement. If the influencer chooses to promote the item, the IRS may view this as a barter transaction—even without a contract. That means the fair market value of the product is considered taxable income. For instance, if a tech influencer receives wireless headphones in the mail, posts about them on Instagram, and tags the brand, they may be required to include the value of the headphones in their income.
On the other hand, if the influencer receives a product but does not use, promote, or mention it, there is a potential argument that the product qualifies as a gift. According to the IRS and the landmark Duberstein case, a true gift must be given with “detached and disinterested generosity”—meaning the giver expects nothing in return. Unfortunately, most unsolicited brand gifts are not given in this spirit. Companies generally expect exposure or promotion, even if it’s not guaranteed. To avoid the risk of owing taxes on unsolicited items, influencers are best off returning them or clearly stating on their platform that they do not accept unsolicited promotional gifts.
Business vs. Hobby: Why It Matters
To qualify for business tax deductions, influencer activities must be treated as a business, not a hobby. Under current tax law, hobby expenses are not deductible, even though hobby income must still be reported. To avoid hobby classification, influencers should demonstrate a profit motive and run their operations in a businesslike manner. The IRS generally considers an activity to be a business if it shows a profit in at least three of the last five years.
Maintaining separate bank accounts, tracking income and expenses, creating contracts, and investing time in growth are all ways to demonstrate a professional approach. If you enjoy influencing but it doesn’t earn money consistently and lacks structure, the IRS may determine it’s a hobby, disallowing all associated deductions.
Final Thoughts: Proactive Planning Pays Off
For content creators, working with experienced legal counsel is critical. Establishing a formal business entity, maintaining thorough documentation, negotiating clear contracts, and ensuring proper classification of income are all foundational steps toward managing legal risk and building a sustainable brand. Until regulatory frameworks catch up with the realities of digital media, influencers should treat all forms of compensation—cash or in-kind—with legal precision.
Contributions to this blog by Emily O’Neill
