What's a better gift for your loved ones than the chance to build wealth? Although some people prefer to get cash or gift cards for occasions such as birthdays, graduations, and holidays, you can do them one better by gifting stock.
Compared to tangible gifts that can wear and tear, stocks can be more beneficial over the long term since they can appreciate over time. Plus, by giving stock as a gift to your friends or family, you may even be able to gift yourself a tax break, while ultimately giving more than if you sold the stock and gave the proceeds as a cash gift. If you want to give back to causes you care about, you can even gift stock to charities.
You can gift stocks through some of the best stock trading apps. These apps typically have low fees, analysis tools, and much more. But remember that there's no guarantee that the stock you gift will increase in value. Also, recipients may be subject to significant capital gains taxes, cutting into your generous sentiment. Or, you might give more than the gift tax exemption, cutting into what you can later pass on.
So, it's important to strategically gift stock so you can maximize the benefits to yourself and the recipients.
Here are some of the top strategies regarding how to transfer stocks to another person as a gift or how to gift stocks to charities.
4 ways to gift stock
Stock, of course, isn't a physical gift that you can buy at the store and wrap in a bow. When you gift a stock, you deliver shares to another individual (or organization), typically from your brokerage account to theirs. Technically, you can also transfer physical stock certificates, but since those have largely been phased out, we'll stick to covering electronic transfers here.
Important: Senders don't sell the shares before transferring the stock to the recipient — doing so would leave you with a tax bill and defeat the potential benefits of gifting stock.
Here are four ways to gift stock to others, depending on the recipient and your preferred approach:
1. Gifting stock to friends and family
One of the most common ways to gift stock is by transferring it from one brokerage account to another. To get started, you'll generally need to contact your brokerage, which technically makes the transfer from your investment custodian, which is often an affiliate of your brokerage or a third party that your brokerage easily connects you with. You can then expect to complete brokerage or custodian-mandated paperwork before gifting the shares of stock, according to Brian Fry, founder and CFP at Safe Landing Financial.
For instance, if you're a current Fidelity account holder and want to gift stock to another Fidelity user, you'll need to complete a form that details information about the recipient's account and the securities you're gifting. There's also a box to check that specifies the transfer is a gift.
If you choose to transfer stock directly, the recipient can receive the full share value (or a fractional share dollar amount if your brokerage allows it). Note, however, that the stock transfer process may vary between brokerages or investment platforms, such as regarding the timing and fees.
For example, with Robinhood, you can transfer assets out of the app and into other brokerages, but there is a $100 fee on all partial or full transfers.
2. Gifting stock to kids
Your children and other minors can also receive stock as a gift through a custodial brokerage account like a UTMA or UGMA. If you're wondering how to gift stock to a child, there are two main ways.
The first gifting process is generally the same as when you transfer stock or another security between brokerage accounts.
You also have the option to buy stock directly within a custodial account, even if you're not the parent or guardian of the recipient. Grandparents, aunts, uncles, cousins, and even family friends can open and contribute through some of the best custodial accounts if the beneficiary is a minor, though exact rules can vary by brokerage.
But be careful how much you or others contribute to a custodial account, or the child may lose tax benefits. If the stocks generate taxable income, such as if they're sold once they're in the custodial account or if they generate dividends, that could trigger taxes for the child. Under the kiddie tax rule for 2025, the first $1,350 of a child's unearned income is tax-free. The following $1,350 unearned income is taxed at the lower child tax rate. After that, all unearned income is taxed at the parent's tax rate.
3. Gifting stock to charities
You can gift stock to other individuals, but you can also gift it to charities. The process for gifting stock to charity is similar to that of gifting stock to other individuals, but the tax implications differ.
To initiate the transfer, you'll generally need to include things like the charity's name, its account information, and the stock(s) you're transferring. You can contact your brokerage if you're not sure where to begin, and the charity you're donating to might also provide more details on how to initiate the transfer.
Unlike when gifting stock to friends and family, however, gifting stock to a charity can provide you with a tax deduction, while enabling you to give more to the charity than you might in cash.
"You want to be giving your lowest basis shares to charity since charity does not pay tax, and those shares are the least valuable to you because they have the highest percentage of capital gains," explains Nicole Webb, CFP and senior vice president at Wealth Enhancement Group.
In other words, if you sold stock that you purchased for a low amount, and now it's worth much more, you could face substantial capital gains taxes. By gifting it to charity, though, you bypass the capital gains tax. And while that capital gains tax burden would ordinarily fall to the recipient when transferring to friends or family, registered charities in the U.S. don't have to pay these taxes, so you can really maximize the gift.
Meanwhile, if you itemize, you can take a tax deduction by counting the gift as a charitable contribution, based on the value of the stock at the time of transfer.
Another option is to gift stock to charity by setting up a donor-advised fund and contributing low-cost basis shares. This can help stack your deductions, according to Webb.
"You can make one larger gift to that donor-advised fund and receive a larger deduction in specific tax years if you're eligible, and then give to charity in the following years out of that account," she explains.
Still, you'll have to account for IRS deductibility limits when making charitable contributions. The rules can be a bit complex, and subject to change, so you might consider checking with a tax advisor or similar professional first. That said, there's a decent chance you won't hit the limit. For 2025, you can gift up to 30% of your adjusted gross income (AGI) when giving capital gain property based on the fair market value.
4. Gifting stock through a service or gift cards
While gifting stock often means transferring your existing shares, that's not the only way. You can also buy stock as a gift in the sense that you can buy gift cards through companies like Stockpile. They're "almost like a transfer of an amount of cash, then [the recipient] chooses where it goes," Owens explains.
You could also purchase single shares of a company's stock through services like GiveAShare, and UniqueStockGift.com. These options even come with a certificate, but costs are often much higher than buying stocks electronically.
Who's eligible to gift stocks?
Everybody is eligible to gift stock, but the real question is who will receive the stock, explains Webb, as well as when.
"The thing to keep in mind is that the recipient of that stock, if you're giving it while you're alive, receives your cost basis for that stock," says Webb.
The cost basis represents the price and any trading fees or other associated expenses you originally paid for the stock you're gifting. When you transfer stock to someone else, that person assumes the cost basis, and thus the tax liability, for the stock you've given them. In other words, gifting stock to individuals isn't a taxable event for you as long as you remain within the annual gift allowance threshold ( $19,000 for individual filers, $38,000 for those who are married filing jointly in 2025). Yet the recipient might pay capital gains taxes when they sell eventually, based on the difference between the price at the time of the sale and the price when it was originally acquired by the giver.
The rules are slightly different for charities. According to Webb, the cost basis doesn't matter when it comes to gifting to charities since charities don't pay taxes. "So if they want to sell the stock, which most charities would, you don't have to worry about any tax consequences for charity," she explains.
Benefits of gifting stocks
Greater value than cash
As the gifter, you can avoid capital gains by transferring stock. That can ultimately mean transferring more money. For example, if you gifted stock worth $10,000 that you originally acquired for $5,000, you can avoid the $5,000 worth of capital gains. At a 15% long-term capital gains tax rate, that means saving $750. In contrast, if you sold the stock for $10,000 and paid the capital gains tax, you'd only have $9,250 to gift in cash.
While the recipient might ultimately owe capital gains taxes when they sell, their capital gains rate might be lower than yours, meaning you both come out ahead vs. gifting cash. Also, gifting stock can help the recipient easily acquire an asset that can grow over time, rather than going through the extra steps of transferring cash and then having the recipient buy stocks with that cash.
Teaches kids investing skills
Stock gifting is often done within families, especially from parents to children, says Dondrea Owens, CPA and founder of The Profit Table.
"A lot of parents and grandparents don't necessarily want to buy toys or just give kids money, but they will give them stock because it's a way for them to start building wealth at a very early age," Owens explains. Not only does that help from a direct monetary perspective, but it can also be a valuable tool used to educate loved ones about money and investing.
If your kids receive stocks as gifts, they might learn from an early age how these assets build wealth over time, and they can learn to appreciate these assets over products they quickly outgrow.
Tax advantages of gifting stock
Tied to the benefit of giving a greater value than cash, a big advantage for the gifter is that it allows you to transfer any capital gains taxes to the recipient if the shares' fair market value is greater than the original cost basis. And if you're donating stock to charity, you'll generally be able to deduct the full fair market value of the securities you're donating.
Moreover, there's no hard cap on the dollar amount you can gift to charity like there is when gifting to individuals. Instead, it depends on your income. But assuming you don't go over those thresholds, then "there's no maximum amount you're allowed to gift to charity in a year," says Webb.
This way, you'll also be able to give more to the organization than you would by selling the stock, paying tax on the appreciation, and then gifting whatever is left.
Tax implications of gifting stocks
As mentioned, when gifting stock, there will be tax implications for both the giver and the receiver. Luckily, it may be possible for both parties to come out on top. Generally, when you sell an asset for more than the price you paid (or, your cost basis), you're subject to a tax on the capital gains. The rate is determined by how long you hold the asset and your taxable income.
However, once the gifter transfers stock ownership, they no longer have to worry about capital gains taxes.
"When you decide to gift it, there's nothing to be taxed," says Owens.
Still, transferring stock from one person to another won't completely eliminate capital gains tax. Someone will have to pay it eventually or, at the very least, report the gain, even if that person is subject to a 0% capital gains tax rate.
The general gift and estate tax also comes into play, whether gifting stock, cash, or anything else of value. The IRS allows you to give away $19,000 tax-free per year per person in 2025. So, consider the value of the stock you're gifting along with any other gifts, such as cash transfers.
If you're gifting more than the gift allowance per year, as the donor, you will need to file a gift tax return and may be subject to a gift tax. The rules get a little complex, but basically when you exceed this annual exemption, you then cut into the lifetime gift and estate tax exemption of $13.99 million per individual (double if married) for 2025 (keeping in mind that amounts may change in the future).
Ultimately, every situation is different, and it's best to consult with a professional about your potential tax liability before making any decisions.
Tax implications of gifting stock to charity
With charitable giving, you can deduct the complete fair market value (or current market value of the stock you're gifting) of the security you're donating.
For instance, if you originally invested $10,000 into a certain stock (and held it for more than one year), and the fair market value at the time of your donation was $40,000, you could both avoid long-term capital gains taxes and make a $40,000 charitable deduction (as long as you don't surpass IRS deduction limits).
What other investment types can you gift?
You can gift most types of investments like bonds, mutual funds, commodities, or cryptocurrencies, with the same limitations regarding taxes.
Whether you're gifting traditional assets like mutual funds or stocks, or offering things like jewelry, precious metals, or other alternative assets, you need to remain mindful of the fair market value of the assets you're transferring when it comes to taxes, Webb explains.
If you're giving stock or something similar, it's helpful to gather any upfront documentation, such as the cost basis of the shares, and provide that to the recipient for their future use. As the receiver, "Keep really accurate documentation of what you received and what its valuation is at any point in time," Owens explains.
Alternatives to gifting stock
There are multiple methods you can utilize if you want a longer-term approach to gifting stock. These include setting up a custodial account or trust account.
Custodial accounts
With the custodial option, you can open an investment account for a minor (typically someone under age 18 or 21, depending on the state), and that minor will assume complete control over the account once they reach their state's age of majority. These can be a good solution for how to gift stock to a child, as you can easily transfer cash into the account and buy stocks within it.
For instance, Charles Schwab offers custodial accounts that let you gift Schwab Stock Slices (or fractional shares) to minors. These are portions of stocks or ETFs that can be bought into for lower amounts than buying full shares (you're not getting a discount, just being able to buy a smaller slice).
Popular custodial account options include Uniform Gift to Minor Act (UGMA) accounts and Uniform Transfers to Minors Act (UTMA) accounts. Although these accounts operate similarly, the kind of assets they hold varies. For example, UGMAs are limited to liquid assets like cash and stocks, whereas UTMAs can hold alternative investments like real estate or collectibles. Nowadays, most states offer UTMAs, while UGMAs are being phased out.
Some other gifts to help advance others' financial future may include funding 529 plans for college or Roth IRAs for children or adult children with income, according to Fry.
Trust accounts
Trust accounts function like custodial accounts, but they offer more wiggle room when it comes to transferring account ownership. In addition, they allow you, the owner, to provide specific instructions for how you want the assets distributed.
Trust accounts are managed by trustees on behalf of a third party and typically can hold assets like stocks, cash, bonds, real estate, and much more. However, there's a lot more legwork (and typically cost) involved with setting up a trust account compared to a custodial account.
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FAQs about gifting stock
What is a gift stock?
A gift stock is a stock transferred from one individual to someone else. Once the asset makes its way into the giftee's account, a gift stock acts like any old stock, except the cost basis is determined by the gifter's original cost basis, which ultimately affects taxes when the stock is sold. Gifted stocks is typically transferred from one brokerage account to another.
Do you have to pay taxes on gifted stocks?
The individual gifting stock can gift up to $19,000 per person in 2025 without paying gift tax, and there are no capital gains taxes for the giver either. Receivers of gift stocks may have to pay capital gains tax when they sell the gifted stock, based on the original cost basis of the giver.
Is it better to gift stock or cash?
When comparing gifting stock versus cash, stock is typically the better gift since it has the potential to rise in value over time and may come with greater tax advantages. However, if the giftee wants to purchase something immediately with the gifted amount, then cash may be preferred for simplicity and to avoid incurring capital gains taxes right away.
Can I gift stock without paying capital gains?
The person gifting stock does not have to pay capital gains if directly transferring the stock to another person's account. You can also potentially gift stock while avoiding capital gains for the recipient, such as by gifting stock to a charity, which does not have to pay these taxes, or if the recipient has low enough income to incur a 0% capital gains tax rate.
Is gifting stock a good idea?
Gifting stock is often a good idea as it can be a valuable way to help others build wealth and learn valuable financial lessons, perhaps more than if you gifted cash.
