Gifting stock is when one person buys shares of a publicly traded company and subsequently transfers ownership to someone else. It's a great idea for two reasons: First, stock returns can compound and turn a small gift into a much larger gift over a long time period. Second, those on the receiving end could become interested in finance and ultimately learn how to invest for themselves. Here's how you can buy and gift stock.
Gifting stocks
Can you gift stock?
You're allowed to give stocks that you own to others. In many cases, any number of shares can be digitally transferred from an owner to a recipient if both parties have a brokerage account.
Buying stocks as gifts
Can you buy stock for someone else?
Besides gifting stock you already own, you can also buy a new stock and then transfer ownership to someone else. This is usually accomplished with a transfer authorization form. If the recipient's account is at a different brokerage than your own, get in touch with the receiving institution to see what it requires.
Who can you give to?
To whom can you gift stock?
Anyone can receive stock as a gift. It could be a family member, a friend, or your favorite charity.
Gifting stocks to children can be a great way to educate them about finance, saving, and building wealth for the future. For example, a child who likes Marvel, Star Wars, or Frozen might enjoy owning a share of Disney (DIS -2.06%). An avid video gamer could learn much from owning some shares of Nintendo (NTDOY 0.05%). Besides benefiting from any future growth of the businesses, owning and reading about individual stocks provides lessons in business and economics.
There is a caveat here, though. Children aren't allowed to own financial assets in most states, so you will have to open a custodial account, such as a Uniform Transfer to Minors Act (UTMA) or Uniform Gift to Minors Act (UGMA) account.
UTMA and UGMA accounts are managed by the custodian (you or the account manager you designate). They're typically transferred to the beneficiary when they turn 18 or 21. You can also open an account in your name or the legal guardian's name for the benefit of the child.
Stock
How to gift stocks
How to gift stocks
There's not a universal step-by-step process for gifting stocks -- it varies depending on who the recipient is and what particular brokerages require. But generally speaking, investors need the account information for the person or organization that will be receiving the gift. Then they need to follow the transfer policies of their own brokerage as well as satisfy the requirements for the receiving brokerage, if it's different.
Benefits
Benefits of gifting stock
- Gifting stock gets others, including young children, interested in saving and investing.
- Stocks are a great long-term gift in lieu of cash if the recipient doesn't have a current need for the money.
- Gifting stock is a tax-efficient way to start transferring wealth to a beneficiary.
- Donating stock to charity could qualify for tax deductions.
Gifting stock to your beneficiaries, rather than selling the stock and gifting cash, could be tax-efficient for both of you. For example, if you own stock with long-term capital gains, the tax owed on earnings in an eventual sale could be as high as 20%.
If your beneficiary is in a lower tax bracket, their tax liability (if they sell the stock rather than keep it invested) would be lower. They could even have zero tax liability if they file their taxes as single and make less than $48,350 a year in taxable income (or less than $96,700 if married filing jointly), as of tax year 2025.
Tax implications
Do you pay taxes on gifted stock?
Any taxes you would normally owe when selling a stock don't apply if you decide to gift it instead. If there are any capital gains on stock you transfer to someone, that capital gain will transfer to the recipient.
Additionally, gifting stock to charities could come with a tax deduction if you itemize your tax return (rather than take a standard deduction). You'll want to check with your tax advisor on any limitations and how much of a deduction you qualify for. Moreover, the charity may need to provide paperwork acknowledging the value. But because charities are tax-exempt, gifting stock (versus selling it yourself, paying the tax, and then giving cash) could maximize what you're able to contribute toward their cause.
Gift limits
Limitations of gifting stock
There's a limitation to consider when gifting stock. The IRS requires you to fill out a gift tax return if you give more than $19,000 per year of cash or property to any recipient as of tax year 2025. If you're married, each spouse is allowed to gift $19,000 per recipient. In other words, gifting $38,000 combined to any one individual is allowed.
There is no limit to how many individuals you can gift, but bear in mind that the $19,000 limit applies to each person to whom you give stock. Any value given over that amount counts against what's called your lifetime gift exclusion, which is $13.99 million per person for tax year 2025. As long as your excess gifts above $19,000 per year don't exceed $13.99 million in your lifetime, you don't have to worry about owing gift taxes.
Generally, there's no tax deduction for gifting cash or stock to individuals, like there is when donating to charity.
Related investing topics
Choosing stocks
How to choose which stocks to gift
When you decide which stocks to give, start with those that have the most capital gains if you're also looking to limit your own future tax liability.
If taxes aren't a concern when picking stocks from your portfolio (or you're planning to buy and then gift), here are a few ideas:
- For kids, choose a company that the child likes to help get them engaged with finances in a positive way.
- Choose quality companies with good competitive advantages. The last thing you want is to gift your friend or family member something that eventually could be worthless.
- Choose companies that have good growth potential in hopes that the stock will become more valuable long-term, maximizing the value of your gift over time.
Gifting stock -- to loved ones for a special occasions to children as a way to build their appreciation for saving and investing, or as part of a tax strategy -- can be a better way to help others accomplish their financial goals compared to giving cash. And, because stocks have the potential to grow, they could be a gift that keeps on giving for a long time.
FAQ
FAQ on Gifting Stock
What are the tax consequences of gifting stock?
When you gift stock, you don't have to worry about capital gains tax. Recipients are responsible for any tax liability when they sell the stock.
What are the tax implications of gifting stock to family?
Giving stock to family members has the same implications as giving to non-family members.
What is the best way to gift stocks?
There are different ways to go about it. But one of the easiest ways to gift stocks is by transferring them from your brokerage account to their brokerage account. This can be particularly simple if you have brokerage accounts with the same company. But circumstances vary, and there may be a better way in your personal situation.
Can you avoid capital gains by gifting stock?
Yes, when you gift a stock, any capital gains tax liability is transferred from the giver to the recipient.
What is the difference between gifted stock and inherited stock?
The implications for taxes on capital gains are pretty different for gifted stocks compared to inherited stocks. For gifted stocks, the cost basis is what the original buyer paid. But for inherited stocks, the cost basis is the value when the original buyer dies. This only applies when the recipient sells.
How is gifted stock taxed when sold?
Gifted stock is taxed when sold according to the IRS brackets for long-term capital gains. Short-term gains are taxed according to the sellers' income tax brackets.
How much stock can you gift per year?
There are no limits to how much stock one can give in a year. But above certain thresholds, givers need to fill out gift tax return forms and eventually it's possible to exceed the lifetime gift exclusion set by the IRS.
