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Gifting stock can be a simple process, as long as your intended recipient has a brokerage account, too. You’ll just need their basic personal and account information. One reason to consider transferring shares of a stock, instead of selling them and gifting the proceeds, is that you’ll typically avoid realizing the capital gains and owing related taxes.
Key Points
• There are several ways to gift stocks, such as setting up a custodial account for kids, setting up a DRIP, virtual transfers, and physically handing over stock certificates.
• Gifting stocks can benefit the giver as well as the receiver, as the giver can take a tax deduction while avoiding capital gains tax.
• The annual gift tax exclusion for 2025 is $19,000 per year, per person.
• Gifting stocks to charities can benefit both the giver and the charity as the giver doesn’t have to pay capital gains taxes and the charity is tax-exempt.
• Gifts can also be made via investing apps and stock gift cards.
The Benefits of Gifting Stocks
Besides being a nice gift (who doesn’t like to give, or receive, a gift?), there are some potential financial benefits to gifting stocks.
There are tax benefits, for one, which allow the donor to deduct the fair market value of the stock on their tax return. You can also potentially avoid capital gains tax, as the receiver inherits a stock’s original cost basis from the donor.
There can be strategic benefits, too. If an investor is looking to rebalance their portfolio or make some reallocations, gifting stock may be an option to consider. And, again, it can allow them to do it while giving a gift, and potentially reducing their tax liabilities.
8 Ways to Gift Stocks
There are several ways that stocks can be gifted, including through custodial accounts, and even gift cards.
1. Set Up a Custodial Account for Kids
Parents can set up a custodial brokerage account for their kids and transfer stocks, mutual funds, and other assets into it. They can also buy assets directly for the account. When the child reaches a certain age they take ownership of it.
This can be a great way to get kids interested in their finances and educate them about investing or particular industries. Teaching kids about short and long term investments by giving them a stock that will grow over time is a great learning opportunity. However, keep in mind that there is a so-called “kiddie tax” imposed by the IRS if a child’s interest and dividend income is more than $2,600.
2. Set up a DRiP
Dividend Reinvestment Plans, or DRiPs, are another option for gifting stocks. These are plans that automatically reinvest dividends from stocks, which allows the stock to grow with compound interest.
3. Gifting to a Spouse
When gifting stocks to a spouse, there are generally no tax implications as long as both people are U.S. citizens. A spouse can either gift a present interest or a future interest in shares, meaning the recipient spouse gets the shares immediately or at a specified date in the future.
According to the IRS, If the recipient spouse is not a U.S. citizen, there is an annual gift tax exclusion of $190,000. Any amount above that would be taxed.
4. Virtual Transfers and Stock Certificates
Anyone can transfer shares of stock to someone else, if the receiver has a brokerage account. This type of gifting can be done with basic personal and account information. One can either transfer shares they already own, or buy them in their account and then transfer them. Some brokers also have the option to give stocks periodically.
Individuals can also buy a stock certificate and gift that to the recipient, but this is expensive and requires more effort for both the giver and receiver. To transfer a physical stock certificate, the owner needs to sign it in the presence of a guarantor, such as their bank or a stock broker.
5. Gifting Stock to Charity
Another option is to give the gift of stocks to a charity, as long as the charity is set up to receive them. This can benefit both the giver and the charity, because the giver doesn’t have to pay capital gains taxes, and as a tax-exempt entity, the charity doesn’t either. The giver may also be able to deduct the amount the stock was worth from their taxes.
For givers who don’t know which charity to give to, one option is a donor-advised fund, or DAF. While the giver can take a tax deduction on their gift in the calendar year in which they give it, the fund will distribute the gift to the charities over multiple years.
6. Passing Down Wealth
Gifting stocks to family members can be a better way to transfer wealth than selling them and paying taxes. For 2025, up to $19,000 per year, per person, can be transferred through gifting of cash, stocks, or a combination.
If a person wants to transfer stocks upon their death, they have a few options, including:
• Make it part of their will.
• Go through a beneficiary designation in a trust.
• Create an inherited IRA.
• Arrange a transfer on death designation in a brokerage account.
It’s important to look into each option and one’s individual circumstances to figure out the taxes and cost basis for this option.
7. Gifting Through a Roth IRA
Gifting stock through an IRA is not technically possible, as you can’t transfer stock from your Roth IRA to another person. But what you can do is gift the recipient funds that they can use to contribute to their own Roth IRA, with some stipulations. And there are thresholds, too, above which a gift could trigger a gift tax.
8. Gifting to Friends Through a Brokerage Account
Finally, you can gift your friends or another recipient via a brokerage account in a fairly straightforward way, assuming the recipient has a brokerage account of their own. Brokerages may have different processes for this, so you may need to get in touch with yours to see what the precise protocol is. But you’ll need the details of their brokerage account, at a bare minimum, and there could be tax implications following the transfer, too.
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Things to Consider When Giving a Stock Gift
Gifting stocks is relatively straightforward, but there are some things to keep in mind. In addition to the $19,000 per year gifting limit and the capital gains tax implications of gifting, timing of gifts is important, and gifting may not always be the best choice.
For instance, when gifting to heirs, it may be better to wait and allow them to inherit stocks rather than gifting them during life. This may reduce or eliminate the capital gains they owe.
Also, there is a lifetime gift exclusion for federal estate taxes, which is $13.99 million in 2025, which can be used to shelter giving that goes over $19,000. However, this is not a great tax option, due to the ways gifts and inherited stocks are taxed.
Generally, an option to give a substantial amount of money to someone is to establish a trust fund.
Tax Implications of Gifting Stocks
There are some tax ramifications of giving stock as a gift.
Capital Gains Tax
There are a few things to be aware of with the capital gains taxes. If the stock is gifted at a lower value than it was originally purchased at, and sold at a loss, the cost basis for the recipient is based on the fair market value of the stock on the date they received it.
However, if the price of the stock increases above the price that the giver originally paid, the capital gains are based on the value of the stock when the giver bought it. In a third scenario, if the stock is sold on the date of the gift at a higher than fair market value, but at a lower value than the giver’s cost basis, no gain or loss needs to be recorded by the recipient.
• Tax implications for giving: When gifting stocks, the giver can avoid paying capital gains tax. can sometimes be a way for the giver and the receiver to avoid paying capital gains taxes.
• Tax implications for receiving: The recipient won’t pay taxes upon receiving the stock. When they sell it, they may be exempt from capital gains taxes if they’re in a lower tax bracket (consider, for example, a minor or retired individual). Otherwise, if they sell at a profit, they should expect to pay capital gains tax. If the annual gifting limit is exceeded, there may be taxes associated with that and the giver will need to file an estate and gift tax return.
How to Choose the Right Stock to Gift
If you choose to give a stock to someone, you might be wondering: Which stock do I actually give them?
There is no right or wrong answer, and perhaps the most important thing to do is give some thought to what the recipient may want or what they think is important. For example, you may not want to gift someone stocks from a fossil fuel company that is passionate about green or renewable energy. Or vice versa.
You may also want to do some basic research as to a stock’s recent performance, so that the recipient doesn’t think that you’re offloading a stinker that’s lost significant value in recent years.
It may be best to simply ask the recipient first; let them know your plans, and ask if they have a preference.
Selecting Blue-Chip vs. Growth Stocks
Assuming you have chosen to gift a stock, you may want to keep things relatively simple and choose a blue-chip or growth stock. These, typically, are stocks of well-known companies that the recipient should recognize.
How to Choose the Right Stock to Gift
As discussed, there may be some personal considerations to think about when choosing a blue-chip or growth stock to give. Ask some questions to get a feel for what the recipient may like, appreciate, or get jazzed about, and then see which stocks may fit the bill. Again: there may not be a right or wrong stock to give!
Understanding Dividend Stocks and Their Impact
If you decide to gift a so-called “dividend stock,” which could be a stock of a company that’s known for dishing out dividends to shareholders, you may want to be aware of the potential tax implications those dividends may have. And, accordingly, let the recipient know, if they’re unfamiliar with investing and the potential tax liabilities they could generate.
In short: Dividends are a form of income, which will generate a tax liability, and if they choose to sell the stock, capital gains taxes could come into play, too.
Recommended: What Are Capital Gains Taxes?
The Takeaway
Gifting stocks is a unique idea that may have benefits for both the giver and the receiver. As you plan for your future, you may decide to build up a portfolio of stocks that you intend to give to your children, parents, or others as you grow older.
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FAQ
Who can I gift a stock to?
In general, you can gift a stock to anyone who has a brokerage account. It’s also possible to gift stock to charitable organizations, or children and minors through a custodial brokerage account.
How do I transfer stocks as a gift?
While the exact steps and protocols for transferring a stock as a gift may vary depending on your brokerage, in general, investors can contact their brokerage and give them the required information to initiate a transfer or transaction.
Are there limits on how much stock I can gift?
Not necessarily, but investors should know that if they gift more than the gift tax exclusion, which is $19,000 for 2025, it could trigger tax liabilities.
Do I need to pay taxes when gifting stocks?
If you gift more than the gift tax exclusion of $19,000 for 2025, gift tax liabilities could come into play. There’s also a lifetime gift tax exemption of $13.99 million for 2025.
What happens if the recipient sells the gifted stock?
If or when a recipient sells their gifted stock, they’ll likely be on the hook for capital gains taxes, as they’ll inherit the gifter’s original cost basis. There could be other tax implications as well, such as the “kiddie tax” or income taxes.
Photo credit: iStock/akinbostanci
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