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To graciously decline a holiday party invitation, express your desire to attend by saying you would love to join, but convey that you cannot do so this year. If there’s a specific reason, such as a medical issue, you may share it, but remember that simply saying "no" is sufficient. Keep your response kind and appreciative; thank the host for the invitation and suggest that you'd love to connect under different circumstances. You can also express hope to get together next year.