Gifting a Car in Arkansas: Taxes, Fees & Rules (2026)
A genuine gift isn't a sale, so no sales tax — both parties sign a gift affidavit and the donor must have previously paid tax on the vehicle. Family sales are taxed like any sale (though the under-$4,000 exemption often covers them). The title fee of $10 still applies. Verified against official Arkansas 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 Arkansas
Even a fully exempt gift pays the standard title transfer fee of $10. The recipient also takes on normal registration costs going forward. Title and register within 60 calendar days. Late: 10% of the sales tax due plus a $3-per-10-day registration penalty capped at the annual registration fee.
Good to know
- 2025 bills to raise the exemption thresholds (SB49/SB82) died in session — the $4,000/$10,000 brackets remain current law. If you sell your old vehicle within 60 days of buying, the proceeds credit against the taxable price.
Frequently asked questions
Do you pay taxes on a gifted car in Arkansas?
A genuine gift isn't a sale, so no sales tax — both parties sign a gift affidavit and the donor must have previously paid tax on the vehicle. Family sales are taxed like any sale (though the under-$4,000 exemption often covers them).
Is it better to gift a car or sell it for $1 in Arkansas?
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 genuine gift isn't a sale, so no sales tax — both parties sign a gift affidavit and the donor must have previously paid tax on the vehicle. Family sales are taxed like any sale (though the under-$4,000 exemption often covers them). Follow the gift procedure, not the $1 shortcut.
What does the title transfer cost on a gifted car in Arkansas?
The title fee is $10 — that's due on gifts too, even when the tax is exempt. Title and register within 60 calendar days. Late: 10% of the sales tax due plus a $3-per-10-day registration penalty capped at the annual registration fee.
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 (dfa.arkansas.gov) — last reviewed 2026-07-17. Estimates are informational only.