You’ve probably benefited from it without even realizing it. It’s the reason that $15 t-shirt you ordered from an overseas site didn't come with a surprise $40 customs bill. It’s also why your boss doesn’t have to track every single time you use the office printer for a personal recipe or grab a free soda from the breakroom.
Technically, it’s called the de minimis rule.
The phrase is actually Latin: de minimis non curat lex. Basically, the law doesn't care about small stuff. It’s a bit of legal common sense that says tracking every single penny or every tiny infraction is a waste of everybody's time. If the IRS or Customs and Border Protection (CBP) tried to audit every single $2 expense or $5 import, the entire global economy would just... stop.
But here’s where it gets messy. What one person calls "small stuff" might be a massive loophole for someone else. In 2026, this little-known rule is at the center of a huge fight between massive retailers, international shipping giants, and the federal government.
What is the de minimis rule exactly?
Think of it as a "free pass" threshold. In the United States, there are two main places where you’ll run into this: taxes (IRS) and imports (Customs).
On the import side—which is what people usually mean when they talk about "the de minimis exception"—it’s a specific dollar amount. If your shipment is worth less than that amount, it enters the country duty-free and with way less paperwork. Currently, that magic number is $800. If you buy a pair of shoes from Italy for $700, you pay no import tax. If those shoes cost $801? Welcome to the world of tariffs and formal entry forms.
The IRS uses the rule differently. For them, it’s about "fringe benefits." If your employer gives you something so small that keeping track of it is "unreasonable or administratively impracticable," it’s not taxed as income.
That free coffee in the kitchen? De minimis.
The $500 gold watch for 10 years of service? Definitely not de minimis.
The $800 threshold that changed everything
It wasn't always $800. Back in 2016, the Trade Facilitation and Trade Enforcement Act (TFTEA) bumped the limit up from a measly $200. It seemed like a good idea at the time. It was supposed to help small businesses and cut down on the backlog at shipping ports.
Then came the explosion of e-commerce.
Suddenly, companies like Shein and Temu realized they could ship individual packages directly to consumers instead of sending massive shipping containers to a warehouse. Because each individual package is usually under $800, they bypass the tariffs that a traditional brick-and-mortar store like Target or Gap has to pay when they import thousands of shirts at once.
It’s a massive competitive advantage. Honestly, it’s a game-changer for pricing.
Critics, including the National Council of Textile Organizations (NCTO), argue this creates an unlevel playing field. They call it a "loophole" that's killing American manufacturing. On the flip side, groups like the National Foreign Trade Council argue that lowering the limit would just make everything more expensive for regular people who are already struggling with inflation.
When the IRS says "No" to the small stuff
Let’s pivot to your paycheck. Most people get confused here because there isn't a hard dollar limit written in the tax code for "small" perks. The IRS is famously vague. They say it depends on "frequency" and "value."
Here is a quick reality check on what counts:
- Occasional meal money or transportation fare for working overtime? Usually fine.
- Occasional tickets for theater or sporting events? Generally de minimis.
- Cash? Never. The IRS is very strict here. If your boss gives you a $5 bill for coffee, that is technically taxable income. There is no such thing as "de minimis cash." Gift cards are the same way because they are "cash equivalents." Even a $5 Starbucks card should, in theory, be reported on your W-2.
Most companies ignore the gift card rule for small amounts because, frankly, the paperwork is a nightmare. But if you're a business owner, be careful. If you give everyone a $25 gift card every month, that stops being "occasional" and starts being a taxable benefit.
The dark side: Fentanyl and counterfeit goods
There is a much darker side to the de minimis rule in shipping that has nothing to do with taxes. Because de minimis shipments (technically called "Section 321" entries) require so little data, they are incredibly hard for Customs to inspect.
We are talking about millions of packages a day.
Law enforcement experts like former CBP officials have testified that bad actors use the $800 limit to smuggle illicit goods in small quantities. It's easier to hide a small bag of fentanyl or a counterfeit Rolex in a single mailer than in a 40-foot shipping container. This has led to a massive push in Congress to reform the rule. Some want to lower the limit to $200 again; others want to ban "high-risk" countries from using it at all.
How to use the rule without getting flagged
If you are a frequent international shopper or a small business owner, you need to be smart about how this works. You can't just "split" a $2,000 order into three different boxes sent on the same day to the same address to avoid the tax.
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Customs isn't stupid.
They use "aggregation" rules. If they see multiple packages from the same seller to the same buyer arriving at the same time, they can treat them as one single shipment. If the total is over $800, you’re looking at fines, delays, and a lot of annoying phone calls with a customs broker.
For business owners providing perks:
- Keep it "infrequent." If you do it every Friday, it’s a pattern, not a de minimis benefit.
- Avoid gift cards. If you want to reward employees, buy the actual pizza or the actual movie tickets.
- Document the "why." If you’re giving a small gift, make sure it’s tied to a specific, one-time event.
Why things are about to change
We are currently seeing some of the biggest shifts in trade policy in decades. The Biden-Harris administration recently proposed new rules to significantly tighten the de minimis exemption, specifically targeting products covered by Section 301 tariffs (which includes a huge chunk of goods from China).
If these changes go through, that "cheap" clothing or tech gadget might suddenly get 25% more expensive because it will no longer qualify for the de minimis shortcut.
It’s a balancing act. The government wants to protect domestic businesses and stop illegal imports, but they also don’t want to clog up the postal system or anger millions of voters who like their low-cost imports.
Moving forward with the de minimis rule
Navigating this doesn't have to be a headache if you stay within the clear boundaries. Whether you are importing goods for a side hustle or just trying to figure out if that holiday ham from your boss is taxable, the core principle remains the same: size and frequency matter.
Immediate actions you can take:
- Check your shipping origins: If you're buying for a business, verify if your supplier is shipping from overseas. If the total order is near $800, prepare for potential duties or split your procurement schedule across different weeks.
- Audit your employee perks: If you’ve been handing out "small" gift cards as rewards, switch to tangible items or occasional meals to stay under the IRS de minimis umbrella.
- Stay updated on "Section 321": If you’re in e-commerce, follow the trade news regarding the "De Minimis Reform Act." The rules in 2026 are more volatile than they were five years ago.
- Don't mess with cash: Never treat cash or high-value items as "small enough to ignore." The IRS always cares about cash.
The "small stuff" is only small until it isn't. Keeping an eye on these thresholds ensures that a simple business decision doesn't turn into a complicated legal or financial audit. Audit your current shipping and "fringe benefit" habits now to avoid being caught off guard by the shifting legal landscape.