Quick answer
Do you pay tax when you give appreciated stock?
Usually not. In 2026 you can give up to $19,000 per recipient with no gift tax filing, and larger gifts generally just use part of your $15 million lifetime exemption. The recipient takes over your cost basis, though, so they owe the capital gains tax when they sell. Inherited shares instead get a stepped-up basis.
Key takeaways
- 012026 annual exclusion: $19,000 per recipient ($38,000 for a married couple splitting gifts).
- 022026 lifetime gift and estate exemption: $15 million per person.
- 03Gifts carry over your low basis (§1015); bequests get a step-up (§1014).
- 04Give lowest-basis shares to charity, high-basis shares to family, and consider holding the lowest-basis shares until death.
| 2026 annual exclusion | $19,000 per recipient |
|---|---|
| 2026 lifetime exemption | $15,000,000 per person |
| Gift basis rule | Carryover basis, IRC §1015 |
| Inherited basis rule | Step-up to fair market value, IRC §1014 |
| Filing | Form 709 for gifts over the exclusion |
| Charity | Deduct fair market value of shares held over 1 year |
The Short Answer
Should you gift appreciated stock?
Gifting appreciated stock is not taxable to you up to the $19,000 annual exclusion per recipient in 2026, and larger gifts usually just use part of your $15 million lifetime exemption. The catch is basis: a gift passes your low cost basis to the recipient (§1015), while shares inherited at death get a stepped-up basis (§1014). So give high-basis or fast-growing shares to family, give your lowest-basis shares to charity, and consider holding the lowest-basis shares you keep until death.
$19,000
2026 annual exclusion per recipient ($38,000 for a married couple)
$15M
2026 lifetime gift and estate exemption per person
40%
Federal gift and estate tax rate above the exemption
The Basis Trap
Is it better to gift stock or leave it in your estate?
Say you hold $1M of stock with a $100K basis. Gift it to your child, who sells: they owe tax on a $900K gain. Leave it to them at death: their basis steps up to $1M and a sale owes roughly nothing. Same shares, very different outcomes.
Chart
Tax your child owes selling $1M of stock with $100K basis
The exemption changes the math: With a $15M per-person exemption ($30M per couple), most families will never pay estate tax. For them, the step-up at death usually beats lifetime gifts of low-basis stock.
What to Give Whom
Which shares should you give to whom?
| Recipient | Give these shares | Why |
|---|---|---|
| Charity or DAF | Lowest-basis, long-term shares | No capital gains for anyone; deduction at fair market value (AGI limits apply) |
| Adult child in a low bracket | Moderate-basis shares | They may sell in the 0% or 15% federal capital gains bracket |
| Minor child | Few or none | Kiddie tax taxes their unearned income above a small threshold at your rate |
| Irrevocable or grantor trust | High-growth shares | Moves future appreciation out of a taxable estate |
| Keep until death | Your lowest-basis shares you won't give to charity | Step-up erases the embedded gain |
Annual Exclusion Calculator
How much can you give without touching your exemption?
Calculator
Annual-exclusion gifting capacity
2026 annual exclusion is $19,000 per donor per recipient.
Per year, tax-free and exemption-free
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Over the period (flat exclusion)
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Per recipient per year
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Gift-splitting between spouses requires filing Form 709. The exclusion is indexed to inflation, so actual future amounts may be higher.
Where Embark fits
Give some shares away. Put the rest to work.
For the low-basis shares you'll hold for a step-up, see what they could target in income meanwhile.
- Keep your lowest-basis shares for the step-up at death
- $0 tax at contribution, so holding for a step-up stays intact
- Targets 10%+ annual income on the shares you keep
Run the numbers
Live prices · takes under a minute · no obligation
Filing and Valuation
How do you report a stock gift and value it?
File Form 709 for gifts above the annual exclusion
Also required to elect gift-splitting with a spouse, even if no tax is due.
Value public stock at the mean of high and low on the gift date
That is the standard valuation rule for listed securities.
Give the recipient your basis and acquisition date
They need both, because your holding period tacks on to theirs.
Transfer in kind; never sell first
Selling then gifting cash triggers the gain to you.
Advanced Structures
What if your estate is above the exemption?
Grantor retained annuity trust (GRAT)
Moves appreciation above an IRS rate to heirs with little gift-tax cost.
Intentionally defective grantor trust
You pay the trust's income tax, which is effectively an additional tax-free gift.
Charitable remainder trust
Income stream, a deduction, and no immediate gain. See CRTs vs. Embark.
Family limited partnership
Can support valuation discounts; heavily scrutinized. Needs specialist counsel.
For the broader estate picture, read Estate Planning for Concentrated Stock.
Where Embark Fits
Can you give some shares and earn income on the rest?
Gifting works best on a slice of a position. For the shares you keep, often the lowest-basis ones you plan to hold for a step-up, Embark's SPV targets 10%+ annual income with $0 tax at contribution and a three-year lock-up, so the shares pay you while you wait.
FAQ
Frequently asked questions
Do I pay tax when I give appreciated stock?
No capital gains tax is due when you give stock. Gifts above the $19,000 annual exclusion per recipient (2026) require Form 709 and use part of your lifetime exemption, but gift tax is only owed after the $15M lifetime exemption is used up.
Is it better to gift stock or leave it in a will?
For low-basis stock, inheritance is often better because heirs get a stepped-up basis under §1014. Gifting makes more sense for high-basis or fast-growing shares, or when the estate may exceed the exemption.
What basis does the recipient get on gifted stock?
Generally your basis (carryover basis under §1015), along with your holding period. For stock worth less than your basis at the time of the gift, special dual-basis rules apply to losses.
What is the best way to give appreciated stock to charity?
Transfer long-term shares directly to the charity or a donor-advised fund. You avoid the capital gain and can generally deduct fair market value, subject to AGI limits (typically 30% for stock given to public charities).
Does the kiddie tax apply to gifted stock?
If a child under the kiddie-tax age limits sells gifted stock, gains above a small annual threshold are taxed at the parent's rate, which removes most of the benefit of shifting gains to a minor.
How do I transfer stock as a gift?
Ask your broker for its gift or journal transfer form, give the recipient's account details, and transfer the shares in kind. Do not sell first, or you will owe the tax yourself. Keep a record of your basis and acquisition date for the recipient.
Is a charitable gift of appreciated stock better than giving cash?
For stock held more than a year, usually yes. You can generally deduct the full fair market value, subject to AGI limits, and neither you nor the charity pays capital gains tax on the appreciation.
Sources
IRS and statutes
Sources
Cite this article
Embark Funds Research. “Gifting Appreciated Stock: 2026 Gift Tax Strategies.” Embark Funds, updated October 15, 2026. https://www.embarkfunds.com/insights/gifting-appreciated-stock-gift-tax
Not tax or legal advice: This article is educational. Exchange funds, partnerships and gifts carry rules that depend on your facts. Work with a CPA and an attorney before acting. Embark income figures are targets, not guarantees.
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Give some. Earn on the rest.
Keep Your Core Position Paying You
Gifting moves shares out of your life for good. For the shares you keep, see what Embark's SPV could target in annual income.