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To graciously decline a holiday party invitation, express your desire to attend while clearly stating your inability to do so this year. You might say, "I would love to see you all, but I just can't attend this year." If you have a specific reason, such as a medical issue, you can mention it, but it's not necessary to provide a long explanation. The key is to respond kindly, thank the host for the invitation, and indicate your interest in future gatherings by saying, "Keep me in mind for next year; I hope we can get together then."