Overview
Documentation is what makes the exemption stick: write 'GIFT' as the consideration on the bill of sale (never $0 or $1 - auditors read that as a taxable sale) and complete Form MVT 5-1, signed by both parties. Everything else about the transaction is unchanged - the $15 title fee, 20-day deadline, registration, and ad valorem tax all still apply whether it's a qualifying gift or not.
01 - Official fees
Alabama gift a car fees at a glance
| Fee | Amount | Notes |
|---|---|---|
| Sales tax - spouse, parent/child, sibling | $0 | must be documented as a gift |
| Sales tax - grandparent, grandchild, in-law, friend | 2% state + local | on fair market value |
| Title application fee | $15.00 | due either way |
| Registration + ad valorem | still due | unaffected by gift status |
Figures verified June 2026 against official sources (listed below). Always confirm the final amount with your county probate judge or license commissioner's office (on behalf of ALDOR) - counties can add small local fees.
02 - Step by step
How to gift a car in Alabama
- 1
Confirm the relationship qualifies (spouse, parent/child including step-relations, or sibling).
- 2
Have the giver sign the title over, writing 'GIFT' where the sale price would normally go.
- 3
Both parties complete and sign Form MVT 5-1.
- 4
Recipient takes the title, Form MVT 5-1, and ID to the county probate office within 20 calendar days.
- 5
Pay the $15 title fee, registration, and ad valorem - no sales tax if the gift qualifies.
03 - Same state, other costs
More Alabama vehicle costs
04 - Common questions
Alabama gift a car FAQ
Who counts as 'immediate family' for Alabama's gift tax exemption?
Spouse, parent or child (including step- and adopted relationships), and sibling. Grandparents, grandchildren, aunts, uncles, cousins, in-laws, and unmarried partners do not qualify - those transfers are taxed as a sale on the vehicle's fair market value.
Can I just write '$1' on the bill of sale to avoid tax?
No. Alabama auditors specifically flag suspiciously low or symbolic prices and can reassess tax based on fair market value plus penalties. For a qualifying family gift, write 'GIFT' - for a non-qualifying transfer, expect tax on the real value regardless of what you write down.
Do I still pay registration and ad valorem tax on a gifted car?
Yes - gifting only affects the sales tax line. The $15 title fee, $23 registration, issuance fee, and annual ad valorem tax (based on assessed value and your local millage) apply the same way they would on a purchased vehicle.
Is Form MVT 5-1 mandatory for a tax-free gift?
Yes. Without a properly completed MVT 5-1 signed by both giver and recipient, the county has no documentation to waive the sales tax and will assess it as a standard transfer, even between qualifying family members.
What if the car being gifted still has a loan on it?
The lienholder has to release the lien before a gift transfer can go through - you can't gift a car that's still collateral for someone else's loan. Pay it off first, or the recipient can refinance it in their own name, which then becomes a taxable purchase rather than a gift.
Does gifting to a grandchild get any tax break at all?
No - grandparent-to-grandchild transfers are outside Alabama's immediate-family exemption and are taxed at the full 2% + local rate on fair market value, the same as gifting to a friend or in-law.
05 - Receipts
Official sources
Every number on this page comes from these documents - check them yourself.