Corporate holiday bonuses traditionally took the form of cash or checks, but gift cards have emerged as popular alternatives in modern workplaces. Companies increasingly select gift cards as year-end appreciation tokens due to their convenience, customisation options, and ability to create memorable experiences beyond simple monetary transactions. giftcardmall.com/mygift offers corporate purchasing programs that simplify bulk ordering while providing tracking and delivery options for business needs. These dedicated services streamline the logistical challenges companies previously faced when handling large-scale gift card distribution to employees across multiple locations.

Tax implications

Despite their non-cash format, gift cards represent taxable income to employees in most jurisdictions. Companies must include gift card values on W-2 forms when they exceed certain thresholds, typically $25-100, depending on location. This tax treatment mirrors cash bonuses rather than qualifying as de minimis fringe benefits exempt from taxation. Proper accounting practices require tracking gift card distribution and values for accurate payroll processing. Companies should consult tax professionals regarding current regulations, as these rules occasionally change. Many organisations gross up gift card values to cover employees’ additional tax burden, ensuring the intended bonus amount reaches employees without unexpected tax consequences diminishing perceived value.

Employee preferences matter

Research shows considerable variation in how employees perceive gift card bonuses compared to cash alternatives:

• Younger generations (Millennials and Gen Z) generally respond more positively to gift cards than older workers
• Employees with families often appreciate gift cards designated for specific experiences or family activities
• Staff members with tighter financial situations typically prefer cash they can allocate toward essential expenses
• Remote workers report higher satisfaction with digital gift card options than physical cards requiring mail delivery
• Administrative and support staff frequently rate gift cards higher than executives or management teams do

Preference surveys conducted before selecting bonus formats yield valuable insights for maximising appreciation impact. Many companies offer choice frameworks rather than uniform decisions, allowing employees to choose their preferred reward format from multiple options.

Flexibility wins the day

The most successful gift card programs emphasise flexibility in both selection and redemption. Multi-store options or broad marketplace gift cards receive consistently higher satisfaction ratings than single-retailer cards that limit spending options. This flexibility gives recipients autonomy in selecting personally meaningful purchases rather than forcing predetermined choices. Digital delivery systems enhance this flexibility through immediate availability and ease of use. Electronic gift cards eliminate physical delivery delays and storage concerns while providing instant access through mobile devices. Many digital platforms also enable partial redemptions, allowing recipients to spread their bonus across multiple purchases rather than spending the entire amount in a single transaction.

When to choose alternatives?

Specific workplace scenarios suggest alternatives outperform gift cards despite their advantages. Teams facing financial hardship generally respond better to direct compensation that they can allocate toward pressing needs. Similarly, workplaces that have experienced recent layoffs or compensation reductions should carefully consider whether gift cards might appear tone-deaf compared to cash alternatives. Organisation size also influences appropriateness, with smaller companies sometimes creating a more meaningful impact through personalised non-monetary recognition than standardised gift cards. The relationship dynamics in smaller teams often benefit from individualised appreciation expressions that demonstrate a genuine understanding of each member’s contributions and preferences.