Gifting a Car in Michigan: Which Relatives Skip the Tax, and What the Paperwork Actually Costs

Gifting a car sounds straightforward. You hand over the keys, the title, and maybe a bow on the hood, and that's it. In Michigan, though, it's not quite that simple. The state lets certain family members skip the 6% use tax, but only if you're the right kind of relative and you file the right form. One wrong signature or a missed deadline and you're writing a check you didn't plan on.

Most people we talk to assume any blood relative counts. The Secretary of State has a much shorter list, and a cousin or an aunt doesn't make the cut. If you're giving a car to a parent, child, or sibling, you're in good shape. Step-relationships and legal guardians get a qualified "yes," but step-siblings? Nope. The tax exemption is strict, and the paperwork is what decides whether you pay $0 or 6% of the car's value.

This isn't just about tax. You'll still pay a title transfer fee, registration, and possibly a late penalty if you drag your feet. The process is not expensive compared to buying a car, but the costs add up if you don't know what to expect. Here is how it really works, based on the actual forms and fee schedules from the Michigan Secretary of State.

Who is family enough for the tax exemption?

Michigan's use tax exemption for vehicle gifts covers a specific list of relatives. If the donor and recipient share one of these relationships, no use tax is due on the transfer:

• Spouse
• Parent or child (including legally adopted)
• Stepparent or stepchild
• Sibling (brother or sister)
• Grandparent or grandchild
• Legally appointed guardian

That's it. There is no broad "immediate family" language that stretches to in-laws, cousins, aunts, uncles, or step-siblings. A stepbrother, for example, does not qualify unless he was legally adopted by your parent. The exemption also doesn't apply to a live-in partner or fiancé; they would owe use tax just like a stranger.

The form that makes it official is the Certification of Use Tax Exemption for a Vehicle Transferred Between Relatives (form TR-207). Both the donor and the recipient must sign it. The form does not need to be notarized, but you will hand it in with your title application at the Secretary of State branch. Without that piece of paper, the clerk will calculate tax on the vehicle's fair market value, and you'll be stuck with a bill you could have avoided.

One pattern we see from people using our calculators is that they fill out the TR-207 but forget that the other forms need notarization. The title application (TR-11L) requires the buyer's signature to be notarized. That trips up people who do the gift paperwork at home and then walk into a branch without a notary. If you want to know exactly what a gift transfer will cost you in Michigan, run the numbers through our Michigan gift-a-car calculator before you head to the SOS.

The title transfer costs you can't avoid

Even with a tax-free gift, the Secretary of State charges a few mandatory fees to transfer ownership. The biggest one is the title fee: $15. That's the same for any title transfer in Michigan, whether it's a sale or a gift. There's no separate gift processing fee, unlike some states that tack on an extra $10 or $50 just because money didn't change hands.

If you wait more than 15 days after the assignment date on the title to apply for the new title, the fee jumps to $30. The SOS tacks on a $15 late penalty, so be mindful of the clock. We've heard plenty of stories of people who stuck the signed title in a drawer for a month and then were surprised by the extra charge. You can check the current title transfer fees and late penalty rules on our Michigan title transfer fee page.

Then comes registration. The recipient must register the vehicle in their own name, which means paying the annual registration tax. Michigan calculates this fee based on the car's original manufacturer's suggested retail price (MSRP) and its age. For a vehicle more than 10 years old, the fee drops to a flat $30 or so, depending on the plate type. For a newer car, the fee can be $150–$300 or more. A 2018 Honda Accord with a mid-level trim might have had an MSRP around $28,000, and six years later the registration tax would likely fall somewhere in the $160–$220 range (the exact figure comes from a depreciation schedule the SOS follows).

If the recipient is transferring a license plate from another vehicle they already own, the plate transfer fee is $10. If they need a brand new plate, it's $5 for the plate itself (plus the registration tax). Honestly, the plate fee is small, but the registration tax is the real cost you need to budget for. Our Michigan registration fee calculator can give you a solid estimate before you walk in.

The paperwork the Secretary of State expects

When you show up at a branch, you'll need a few things in hand. The donor should have given you the title, properly signed on the back in the seller's section. They also need to fill in the odometer reading if the car is less than 10 model years old, and the sale price should be listed as "GIFT" or $0.

The recipient brings these items to the SOS:

• The signed title from the donor (the assignment must be complete)
• A completed Application for Michigan Vehicle Title (form TR-11L), with the buyer/recipient's signature notarized
• The Certification of Use Tax Exemption (form TR-207), signed by both parties (not notarized)
• Proof of valid Michigan no-fault insurance for the vehicle
• Payment for the title fee, registration tax, and plate fee if applicable

If the donor has misplaced the title, they'll need to apply for a duplicate title before the gift can happen. That's another $15 and a trip to the SOS for them. The recipient can't file for a lost title on a car they don't own yet.

One detail that catches people off guard: both the donor and recipient need to be present at the SOS? No. The donor can sign everything at home, but the recipient must appear in person or mail the documents. The notarization requirement on the TR-11L is what forces you to either visit a branch or find a notary before mailing things in.

A real gift, walked through dollar by dollar

Let's say a father in Grand Rapids is giving his 2018 Honda Accord EX to his 22-year-old daughter. The car is paid off, the title is clean, and the father has it in his name. The daughter has her own insurance policy ready. Here is what they'll pay:

• Use tax: $0. Without the exemption, the state would assess 6% on the fair market value. If the Accord is worth $18,000, that's $1,080 they just saved. The TR-207 form makes this official.
• Title transfer fee: $15. They gave the title to the daughter the same day, and she went to the SOS three days later, so no late fee.
• Registration tax: $185. Based on the original MSRP and the car's age, the SOS computer spits out this number. It's not negotiable, but it's also not a surprise if you've estimated it ahead of time.
• New plate fee: $5. She doesn't have a plate to transfer, so she needs a standard passenger plate.
• Total out the door: $205.

Compare that to a sale between the same two people without the exemption: they'd owe the $1,080 use tax plus the same fees, bringing the total to around $1,285. The TR-207 form is the only difference. That's why people tell us the paperwork feels like a bureaucratic hassle but the savings are absolutely worth it.

If the daughter had waited 16 days instead of 3, the total would jump by $15 to $220. If the father still owed money on the car, the lienholder would hold the title, and they'd have to pay off the loan and get the lien released before any of this could happen. You can't gift a car you don't fully own.

When the car isn't paid off

Gifting a car with an outstanding loan is not a simple transaction. The title has a lien on it, and the Secretary of State won't transfer ownership until that lien is satisfied. The donor has to pay off the loan, the bank sends a lien discharge to the SOS (or mails the title with a lien release to the donor), and only then can the donor sign the title over to the recipient.

In some cases, the recipient might take over the loan payments informally, but the vehicle still remains in the donor's name until the loan is paid. That's risky. The recipient could be driving a car that legally belongs to someone else, and if there's an accident or a coverage dispute, things get messy. Our advice: either pay off the loan before the gift, or sell the car to the recipient for enough to cover the payoff and treat it as a purchase (which means use tax will apply). There's no clean family-transfer exemption when a bank is involved.

Not immediate family? You'll pay use tax

If the donor and recipient don't match the TR-207 list, the transaction is treated like any other private-party sale. The recipient pays use tax at 6% of the vehicle's fair market value or the purchase price, whichever is higher. For a gift, the purchase price is $0, so the SOS defaults to the fair market value from an approved pricing guide (often the NADA clean trade-in value).

That can sting. A gift from an uncle to a nephew on a car worth $15,000 comes with a use tax bill of $900. The title and registration fees are the same, but the tax makes it a much pricier handover. Some people ask if they can just write in a low sale price, but the SOS has started checking values more closely, especially when the relationship doesn't qualify for the exemption. You can always run the tax scenario on our Michigan sales tax calculator to see what you'd owe if the exemption doesn't apply.

How other states handle family car gifts

Michigan's approach is pretty standard, but a few quirks stand out when you look around. In Texas, the form is an affidavit of motor vehicle gift transfer, and if it's between eligible relatives, you pay a $10 gift tax instead of the 6.25% vehicle sales tax. California also exempts use tax for qualifying family transfers, but you have to submit a Statement of Facts and sometimes a smog certification if the car is more than four model years old. New York charges no sales tax on gifts to immediate family, but the state DMV hits you with a $50 "gift transfer" fee that Michigan doesn't have.

The lesson? Every state carves out its own list of who counts as family and what fee, if any, replaces the tax. Michigan's exemption is one of the cleaner ones: no gift fee, just the ordinary title and registration costs. You can compare state rules on our state-by-state fee pages if you're dealing with a cross-border gift.

Common questions

Can I gift a car to my aunt in Michigan without paying tax?

No. Aunts and uncles are not on the TR-207 exemption list. The transfer will be treated as a sale, and the recipient will owe 6% use tax on the car's fair market value. The same goes for cousins, nieces, nephews, and in-laws.

What if the title is lost?

The donor must apply for a duplicate title before the gift can go through. That's a $15 fee and a trip to a Secretary of State office (or by mail). The process takes about 7–10 days for a paper title to arrive. Only the owner listed on the title can request the duplicate.

Is there a separate gift tax on vehicles in Michigan?

No. Michigan does not have a state gift tax, and the federal gift tax only kicks in for extremely large lifetime transfers ($13.61 million in 2024). For most people, giving a car to a relative creates no gift tax obligation at all. The only tax at stake is the use tax that you avoid with the TR-207 form.

How long does the transfer take, and can the recipient drive the car immediately?

The recipient can drive the car as soon as the title is signed over, provided they have insurance. They should keep the signed title and a copy of the insurance card in the vehicle. Michigan law requires you to apply for the new title within 15 days. If pulled over, the signed title and proof of insurance should satisfy an officer, but driving with an expired plate from the donor is not allowed. The recipient should get a new plate or transfer a current one right away.