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To graciously decline a holiday party invitation, express a desire to attend while stating you cannot this year. You might say, “I would love to see you all and come, but I just don’t feel I can do that this year.” If appropriate, you can mention a specific reason, such as a medical issue. However, remember that a simple "no" is sufficient, and you don’t need to provide an extensive explanation. Respond kindly by thanking the host for the invitation and expressing hope to get together in the future, such as saying, “Keep me in mind for next year.”