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Vehicle Gift Tax by State

How to gift a car without paying unnecessary sales tax — state exemptions, required forms, eligible relationships, and federal gift tax basics.

$18,000
Federal Annual Exclusion
per recipient before gift tax applies (2024)
$10
Flat Gift Tax (TX)
vs. 6.25% standard rate
6–8
Eligible Relationships
family members in most states
2–3
Documents Needed
signed title, gift form, bill of sale

How to Gift a Car

1
Confirm Eligibility
Verify the recipient qualifies for your state's family gift exemption. Non-qualifying transfers may still be subject to sales tax at fair market value.
2
Complete Required State Forms
Some states require a specific gift affidavit (Texas Form 14-317, New York DTF-802). Others handle it on the title transfer form.
3
Sign the Title
Donor signs as seller on the reverse of the title. Recipient's name is entered. Odometer mileage is recorded.
4
Notarize If Required
Texas requires notarization of Form 14-317. A handful of other states require notarized gift affidavits for specific scenarios.
5
Submit to DMV
Recipient takes the signed title and any required forms to the state DMV or county title office. Standard title and registration fees apply.

Federal Gift Tax at a Glance

Annual Exclusion
$18,000 (2024)
Per recipient, per year
Lifetime Exemption
$13.61 million (2024)
2024 federal exemption amount
Form Required?
Form 709 (if gift exceeds annual exclusion)
Tax Actually Owed?
Rarely — lifetime exemption prevents most vehicle gifts from resulting in actual federal tax

Vehicle Gift Rules by State

StateExemption ForRequired FormNotarize
CaliforniaFamily membersREG 256No
TexasFamily membersForm 14-317 (notarized)Yes
FloridaLineal relatives + spouseNoneNo
New YorkImmediate familyDTF-802No
IllinoisImmediate familyNone (on VSD 190)No
OhioFamily membersNoneNo

Vehicle Gift Tax Guide by State

AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyomingPuerto Rico

Frequently Asked Questions

Do I have to pay sales tax when gifting a car?

Most states exempt vehicle gifts between family members from sales tax entirely. However, if you gift a vehicle to a non-family member or to a non-qualifying relative, sales tax may be assessed on the vehicle's fair market value — not the gift price of $0.

What is the federal gift tax on a car?

The federal gift tax annual exclusion is $18,000 per recipient (2024). Most vehicle gifts fall below this threshold and require no federal gift tax return. Even for gifts above the exclusion, the $13.61 million lifetime exemption means most people never pay actual federal gift tax.

Can I gift a car to anyone?

You can gift a car to anyone — but only certain family relationships qualify for state sales tax exemptions. Gifts to friends, coworkers, or non-qualifying family members are typically taxed at fair market value.

What is the cheapest state to gift a car?

Texas charges a flat $10 gift tax for qualifying family transfers instead of the standard 6.25% rate — making it particularly favorable for gifting high-value vehicles. Most other states with exemptions charge $0 sales tax for qualifying gifts.

Do I need a bill of sale when gifting a car?

A bill of sale is not always required but is strongly recommended. It documents the transfer, states the $0 or nominal consideration, identifies both parties, and protects against future disputes or liability claims.

Can I write "$1" on the title to avoid gift tax?

No — this is a common but risky approach. Most state DMVs assess sales tax on fair market value, not the declared price, when the declared price is far below market value. Writing $1 may trigger an audit and back-tax assessment. Use the proper gift transfer process for your state instead.

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