Gifting a Car in Alabama: Taxes, Fees & Rules (2026)
A bona fide gift with no lien attached is not taxed — write "GIFT" on the title and bill of sale. Family sales for any price are taxed like normal sales, and a gift with an assumed loan is taxed on the loan balance. The title fee of $16.5 still applies. Verified against official Alabama sources on 2026-07-17.
Gift vs. selling for $1: don't use the $1 trick
The old advice to "sell it for a dollar" usually backfires. A $1 sale is still a sale — in states that tax the higher of price or book value, that means tax on the full book value; in others it simply voids the gift exemption you were entitled to use. The documented gift route (affidavits, the right box on the title) is what actually produces $0 tax where an exemption exists.
What you'll still pay in Alabama
Even a fully exempt gift pays the standard title transfer fee of $16.5. The recipient also takes on normal registration costs going forward. Register within 20 calendar days of purchase. Late registration adds a $15 penalty plus interest.
Good to know
- Title fee is $15 state + $1.50–$3.00 designated-agent commission depending on who processes it.
Frequently asked questions
Do you pay taxes on a gifted car in Alabama?
A bona fide gift with no lien attached is not taxed — write "GIFT" on the title and bill of sale. Family sales for any price are taxed like normal sales, and a gift with an assumed loan is taxed on the loan balance.
Is it better to gift a car or sell it for $1 in Alabama?
Gift it — properly. A $1 "sale" is still a sale in most states and can trigger tax on book value or invite a review, while a documented gift uses the actual exemption. A bona fide gift with no lien attached is not taxed — write "GIFT" on the title and bill of sale. Family sales for any price are taxed like normal sales, and a gift with an assumed loan is taxed on the loan balance. Follow the gift procedure, not the $1 shortcut.
What does the title transfer cost on a gifted car in Alabama?
The title fee is $16.5 — that's due on gifts too, even when the tax is exempt. Register within 20 calendar days of purchase. Late registration adds a $15 penalty plus interest.
Does the IRS tax a gifted car?
Almost never for normal vehicles — car values fall under the IRS annual gift-tax exclusion for most givers, so no federal gift tax or return is required. The state-level rules above are what actually matter.
Verified against official sources (revenue.alabama.gov, revenue.alabama.gov) — last reviewed 2026-07-17. Estimates are informational only.