In Texas, the concept of "gift tax" primarily applies to specific situations, most notably the transfer of motor vehicles. For general gifts, the state of Texas does not impose a gift tax.
Understanding Gift Tax in Texas
The question "Who pays gift tax in Texas?" requires a two-part answer, as Texas's approach to gift taxation differs significantly from federal guidelines and specific state-level applications.
Texas Does Not Impose a General State Gift Tax
Unlike some other states or the federal government, Texas does not have a state-level gift tax on general gifts such as money, real estate, stocks, or other assets transferred between individuals.
- Federal Gift Tax: While Texas does not levy its own gift tax, residents of Texas are still subject to federal gift tax laws. Under federal law, the person giving the gift (the donor) is generally responsible for paying the gift tax, not the recipient. However, federal gift tax only applies to gifts exceeding an annual exclusion amount (e.g., $18,000 per recipient per year as of 2024) and a lifetime exclusion amount (a much larger sum). For more details on federal gift tax, refer to the Internal Revenue Service (IRS).
Who Pays "Gift Tax" on Motor Vehicles in Texas?
When a motor vehicle is transferred as a gift in Texas, there is a specific tax that applies, often informally referred to as a "gift tax" or "sales tax on a gifted vehicle."
The eligible person receiving the motor vehicle is responsible for paying this tax. This payment is made to the county tax assessor-collector (CTAC) at the time the person titles and registers the motor vehicle.
What is This Motor Vehicle Gift Tax?
This "gift tax" for motor vehicles is essentially a sales tax calculated on the vehicle's value, even though no money directly exchanged hands for its purchase. It ensures that a sales tax equivalent is collected on the transfer of ownership, as most motor vehicle transfers are subject to sales tax.
Key Details for Motor Vehicle Gift Tax:
- Payer: The recipient of the gifted motor vehicle.
- When to Pay: At the time of titling and registering the vehicle.
- Where to Pay: To the local County Tax Assessor-Collector's office.
- Tax Rate: The general motor vehicle sales tax rate in Texas is 6.25%.
How is the Tax Calculated?
The tax is typically calculated based on the vehicle's Standard Presumptive Value (SPV), which is a value determined by the Texas Department of Motor Vehicles.
- Standard Presumptive Value (SPV): This is the presumed value of a vehicle based on its make, model, and year. The tax will be 6.25% of the greater of the sales price (if any) or the SPV.
- Affidavit of Motor Vehicle Gift Transfer (Form 14-317): To declare a vehicle as a gift and potentially qualify for certain exemptions or have the tax calculated on a different value, the donor and recipient must complete a Texas Comptroller of Public Accounts Form 14-317, Affidavit of Motor Vehicle Gift Transfer. This form confirms the gift status.
- Minimum Tax: Even if the vehicle is fully exempt or its value is very low, a minimum administrative fee of $10 is generally applied when titling a gifted vehicle.
Exemptions for Motor Vehicle Gift Tax
Texas law provides specific exemptions from this motor vehicle gift tax based on the relationship between the donor and recipient. If an exemption applies, the $10 minimum tax will still be collected.
| Relationship | Exemption Status |
|---|---|
| Spouse to Spouse | Exempt from motor vehicle gift tax. |
| Parent to Child | Exempt from motor vehicle gift tax. |
| Grandparent to Grandchild | Exempt from motor vehicle gift tax. |
| Stepparent to Stepchild | Exempt from motor vehicle gift tax. |
| Charitable Organization Recipient | Exempt for gifts to certain non-profit/charitable organizations. |
| Others (e.g., Siblings, Friends) | Generally not exempt; the recipient pays the 6.25% tax based on the vehicle's value. |
Example: If a parent gifts a car to their adult child, the child (recipient) would complete Form 14-317 and pay only the $10 administrative fee when titling and registering the vehicle. However, if a friend gifts a car to another friend, the recipient would pay 6.25% of the vehicle's SPV (or declared value if lower and properly documented) plus the $10 administrative fee.
For official information regarding motor vehicle transfers and sales tax, refer to the Texas Department of Motor Vehicles or the Texas Comptroller of Public Accounts.
