Can You Transfer Stock to Another Person Without Paying Taxes?

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If you're Googling, "Can you transfer stock to another person without paying taxes?" the short answer is yes, you can transfer stock to another person without immediate tax consequences through gifting. There are potential tax implications to consider, but gift tax exclusions often allow you to transfer relatively large amounts tax-free.

However, important nuances and tax rules still apply when giving stock as a gift or transferring it to another person. Here's everything you need to know.

Can I Gift My Shares to Someone?

You can gift shares to anyone, including family members, friends, or organizations. The process is straightforward. You transfer ownership of the shares from your account to theirs without receiving payment in return.

Most brokerages have specific forms for gifting shares. You'll need the recipient's brokerage account information to complete the transfer. If they don't have an account with your brokerage, they may need to open one. The best thing you can do is check with your specific brokerage.

Related Article | How to Pass Money to Heirs Tax-Free

How Do I Transfer Ownership of Stock to Another Person?

Transferring stock ownership typically requires you to contact your brokerage company and request their stock gift or transfer form.

You'll need to complete the form with your information and the recipient's account details, specify the exact shares and quantities you want to transfer, and sign/submit it. It's usually not a very complicated process.

Do I Pay Tax If I Transfer Shares?

When you gift shares, you generally don't pay income tax on the transfer. However, there are important tax considerations to think about:

Annual Gift Tax Exclusion: In 2025, you can gift up to $19,000 worth of shares per recipient without any tax reporting requirements. Married couples can combine their exclusions to give up to $38,000 per person.
Lifetime Gift Tax Exemption: If you gift more than the annual exclusion amount, you'll need to file a gift tax return (Form 709). However, you likely won't owe actual gift tax unless your lifetime gifts exceed $13.99 million (as of 2025).
Cost Basis Transfer: When you gift shares, the recipient inherits your original cost basis and holding period. This means they'll eventually pay capital gains tax based on what you originally paid for the shares when they sell.

For example, let's say you purchased 100 shares of a company for $30 per share ($3,000 total) in 2018. Now those shares are worth $100 each ($10,000 total), and you gift them to your daughter. She inherits your $30 per share cost basis. When she eventually sells the shares for $120 each ($12,000 total), she'll pay capital gains tax on the $9,000 profit ($12,000 sale price minus $3,000 original cost basis).

The gift's value is determined by the fair market value of the shares on the date of the gift, typically the average of the high and low trading prices that day.

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Can You Transfer Stock to Another Person Tax-Free?

Yes, you can transfer stock to another person tax-free in several situations, including gifts under the annual exclusion limit, transfers to your spouse, and donations to qualifying charities.

You may not be able to completely avoid taxes in the long term, but there are ways to transfer stock to another person with minimal tax impact. You can work with a qualified tax advisor to transfer stock to another person in the most tax-efficient way for both the giver and the recipient.

Gift Transfers

Gifting stock is one of the most common tax-efficient transfer methods. When you gift stock, you won't pay income tax on the appreciation of the stock when you transfer it. The recipient doesn't pay income tax for receiving the gift, either.

For relatively small transfers, you can use your annual gift tax exclusion ($19,000 per recipient in 2025).

For larger gifts, you can tap into your lifetime gift tax exemption ($13.99 million in 2025), but keep in mind that you'll need to file a gift tax return (Form 709) and the amount will reduce your available estate tax exemption when you die.

The key benefit of gifting stock instead of cash is that you avoid paying capital gains tax on appreciated shares. However, remember that the recipient inherits your original purchase price (cost basis) and holding period.

If you're gifting shares that have decreased in value since you bought them, consider selling them first, claiming the tax loss, and then gifting the cash instead. This strategy maximizes tax benefits for both you and the recipient.

Related Article | How to Legally Avoid Taxes

Transfers to Spouse

Transfers between spouses receive special treatment under tax law. According to the Internal Revenue Code, you can transfer unlimited amounts of stock to your spouse without triggering gift tax. No gift tax return is required, regardless of the amount transferred.

In this scenario, your spouse still receives your original cost basis in the shares. The holding period also transfers, which matters for determining long-term vs. short-term capital gains.

This unlimited marital deduction makes transfers between spouses completely tax-free during your lifetime. This rule applies only to spouses who are U.S. citizens. Different rules apply to non-citizen spouses, who are subject to annual limits on tax-free gifts.

Charitable Donations

Donating stock to qualified charitable organizations can come with tax advantages. You avoid paying capital gains tax on appreciated stock, you receive a charitable deduction for the full fair market value of the stock (if held for more than one year), and the charity pays no tax when it sells the stock.

Your donation reduces your taxable income, potentially putting you in a lower tax bracket.

For example, if you donate stock worth $10,000 that you originally purchased for $2,000, you can claim a $10,000 charitable deduction and avoid paying capital gains tax on the $8,000 appreciation.

To qualify for these benefits, you must have owned the stock for more than one year, and the organization must be a qualified 501(c)(3) charity. For donations over $5,000, you'll need a qualified appraisal and must file Form 8283 with your tax return.

Related Article | The Ultimate Guide to Charitable Giving

Trust Transfers

Transferring stock to a trust can be a good wealth management strategy, too. That said, it's important to choose the right type of trust for your financial goals:

Revocable Living Trusts: These provide no immediate tax benefits, as you still own the assets for tax purposes. However, they help avoid probate and provide management flexibility.
Irrevocable Trusts: Transferring stock to these trusts removes the assets from your taxable estate, potentially reducing estate taxes. Common examples include Grantor Retained Annuity Trusts (GRATs), Charitable Remainder Trusts (CRTs), and Generation-Skipping Trusts.

When transferring to a trust, the gift tax rules still apply, but certain trusts are structured to minimize the gift tax value. For example, a properly structured GRAT can transfer stock appreciation with little to no gift tax cost.

It's recommended to work with a tax professional for trust transfers to stay in compliance with the Internal Revenue Service (IRS) and avoid costly mistakes.

Related Article | At What Net Worth Do I Need a Trust?

FAQs

Can I Transfer My Shares to a Family Member?

Yes, you can transfer shares to any family member, including parents, siblings, children, or other relatives. The process works the same as any gift transfer. You'll complete the necessary forms with your brokerage, and the recipient will receive the shares in their account. Transfers to family members other than your spouse are not subject to income tax, but they are subject to gift tax rules if they exceed the annual exclusion amount of $19,000 per person in 2025.

Can You Gift Stock to a Child to Avoid Taxes?

Gifting stock to a child can be a good tax strategy, but it's not a way to completely avoid taxes. You can avoid capital gains tax on appreciated stock by gifting it, but the child will eventually pay capital gains tax based on your original cost basis when they sell the shares. For children under 18 (or up to 24 for full-time students), the "kiddie tax" may apply, which taxes investment income above a certain threshold at the parent's tax rate rather than the child's potentially lower rate.

Can I Gift Shares to My Wife Tax-Free?

Yes, you can gift unlimited shares to your spouse completely tax-free if your spouse is a U.S. citizen. These transfers fall under the unlimited marital deduction, which means no gift tax applies and you don't need to file a gift tax return. Your spouse will inherit your cost basis and holding period for the shares, so capital gains tax will still apply if your spouse decides to sell the shares.

Does Gifted Stock Count as Income?

No, receiving gifted stock is not considered taxable income for the recipient. The person receiving the stock doesn't pay income tax when they receive the shares. However, when they eventually sell the stock, they will pay capital gains tax on the difference between the sales price and the original owner's cost basis. The recipient doesn't get a step-up in basis from a gift as they would from an inheritance.

Can You Transfer Stock Without Paying Capital Gains?

Yes, you can transfer stock without triggering capital gains tax through gifts, charitable donations, and spousal transfers. When you gift stock, you don't realize capital gains, but the recipient inherits your original cost basis. With charitable donations of appreciated stock held for more than a year, neither you nor the charity pays capital gains tax. However, these strategies typically only defer the capital gains tax. If the recipient sells the gifted shares, they'll owe tax on the gains.

The Bottom Line

You can typically transfer stock to another person without paying taxes, but it's important to consider the long-term tax implications for recipients. Typically, you'll only defer the capital gains tax and it'll still be payable in the future.

Consider working with a knowledgeable financial advisor or a tax professional to create a strategy that'll minimize your tax liability.