Anything you receive of value in return for your services is taxable income. This is not a tax-free gift. Employers are not allowed to make tax-free gifts except within the narrow limits set out in IRS publication 15-B and this does not fit one of those exceptions.
Your employer is required to include the gift in your W-2 box 1 taxable income and to withhold social security and Medicare tax.
If your employer does not report this, there is a way to report this as “other income that should have been on my W-2”. That way you only pay 7.65% social security and Medicare tax instead of 15.3% self employment tax. I can’t look up now exactly how to report this, but I would first wait and see if it is included in your W-2 income.
