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To graciously decline a holiday party invitation, express your appreciation for the invitation and convey your desire to attend, while stating that you cannot make it this year. You can mention a specific reason, such as a medical issue, but it's not necessary to provide a lengthy explanation. Politely thank the host for the opportunity and suggest a willingness to connect in the future. A simple response could be: "I would love to join, but I'm afraid I can't this year. Please keep me in mind for next year, and hopefully we can get together then."