How Do You Gift a Car in Illinois?

AvatarByNicole Eder Gift Preparation & Tips

Gifting a car in Illinois can be a meaningful and generous way to help a loved one, celebrate a special occasion, or simply pass on a vehicle you no longer need. Whether it’s a family member, friend, or someone else close to you, transferring ownership of a car as a gift involves more than just handing over the keys. Understanding the proper legal steps ensures the process is smooth, official, and free of complications.

Navigating the requirements for gifting a car in Illinois involves knowing the necessary paperwork, title transfer procedures, and any tax implications that may arise. While the idea of gifting a vehicle might seem straightforward, the state’s regulations are designed to protect both the giver and the recipient, making it essential to follow the correct protocols. From completing the title to notifying the Illinois Secretary of State, each step plays a crucial role in making the gift official.

Before diving into the specifics, it’s important to grasp the general framework surrounding vehicle gifting in Illinois. This overview will help you appreciate why certain documents are required and what responsibilities fall on each party involved. By understanding these basics, you’ll be well-prepared to navigate the process confidently and ensure your thoughtful gift is legally recognized.

Completing the Title Transfer

Once you have agreed to gift the car, the next crucial step is transferring the vehicle’s title to the recipient. In Illinois, the title transfer must be done properly to legally document the gift and avoid future liabilities.

The person gifting the car (the donor) must sign the assignment of title section on the back of the title certificate. This section includes:

  • The donor’s printed name and signature
  • The odometer reading at the time of transfer
  • The date of the gift transaction

The recipient (the donee) also needs to complete their portion of the title, including their name and address. It is essential that all signatures and information are accurate and legible to prevent processing delays.

In the case of a vehicle with a lienholder, the lien must be satisfied or released before a clean title can be transferred. If the lienholder still holds an interest, their signature or a release letter may be required.

Submitting Required Documents to the Illinois Secretary of State

After completing the title transfer section, the donee must submit the necessary documents to the Illinois Secretary of State (SOS) to officially register the vehicle in their name. The required documents typically include:

  • The signed vehicle title
  • A completed Application for Vehicle Transaction(s) (Form VSD 190)
  • Proof of Illinois residency
  • Payment for applicable fees (unless exempt)

Illinois provides an option to complete certain transactions online or by mail; however, gifting a vehicle often requires an in-person visit or mailing documents to the SOS office.

Understanding Tax Implications and Exemptions

Illinois generally imposes a motor vehicle use tax on title transfers, calculated based on the purchase price or fair market value. However, gifting a car is often exempt from this tax if specific conditions are met.

To qualify for the gift exemption:

  • The transfer must be between family members or close relatives, such as parents, children, siblings, grandparents, or spouses.
  • The vehicle must be transferred without any payment or exchange of value.

The donee must complete and submit the Gift Tax Exemption form (Form RUT-50) along with the title transfer to claim this exemption.

Failure to properly claim the exemption may result in the recipient being required to pay the motor vehicle use tax based on the vehicle’s fair market value.

Additional Requirements and Considerations

When gifting a car in Illinois, consider the following points to ensure a smooth transfer:

  • Safety Inspection: If the vehicle is more than 4 years old, it may require a valid safety inspection before registration.
  • Insurance: The donee must obtain auto insurance before registering the vehicle.
  • License Plates: The recipient may keep existing license plates or request new ones during registration.
  • Release of Liability: The donor should notify the Illinois SOS of the transfer to release themselves from liability for any future incidents involving the vehicle. This can be done online via the SOS website.

Summary of Key Steps and Documents

Step Responsible Party Documents/Actions Notes
Sign Vehicle Title Donor & Donee Signed title with odometer reading Ensure all information is accurate
Complete Application for Vehicle Transaction Donee Form VSD 190 Required for title transfer
Submit Documents to SOS Donee Title, application, proof of residency, gift exemption form In-person or mail submission
Claim Gift Tax Exemption Donee Form RUT-50 Must meet relationship criteria
Obtain Insurance Donee Proof of insurance Required before registration
Notify SOS of Transfer Donor Release of liability notification Recommended to limit liability

Legal Requirements for Gifting a Car in Illinois

Gifting a car in Illinois involves specific legal steps to ensure the transfer of ownership is completed correctly and in compliance with state laws. The process primarily focuses on the proper execution of the title transfer and adherence to tax exemptions applicable to gifted vehicles.

Key legal requirements include:

  • Title Transfer: The vehicle’s title must be legally transferred from the donor (giver) to the recipient (donee). The donor must sign the title over to the recipient, indicating the gift status.
  • Odometer Disclosure: If the vehicle is less than 10 years old, an odometer disclosure statement must be included on the title or a separate form.
  • Gift Affidavit: Illinois requires a completed form to declare the vehicle as a gift, which helps in tax exemption processing.
  • Vehicle Registration: The recipient must register the vehicle in their name within 20 days of the transfer.
  • Sales Tax Exemption: Gifting a vehicle is exempt from sales tax in Illinois if proper documentation is provided, including a gift affidavit and proof of family relationship, if applicable.

Step-by-Step Process to Gift a Car

Follow these steps to correctly gift a vehicle in Illinois:

Step Action Details
1 Prepare the Title The current owner must sign the back of the title in the “Assignment of Title” section and write “Gift” where the purchase price is usually entered.
2 Complete Odometer Disclosure If the vehicle is less than 10 years old, disclose the odometer reading on the title or on a separate form as required by Illinois law.
3 Fill Out the Gift Tax Exemption Affidavit Use Form RUT-50 to certify that the vehicle is a gift, which exempts the recipient from paying sales tax.
4 Submit Documents to Secretary of State The recipient must take the signed title, completed affidavit, and a valid ID to a Secretary of State facility to apply for a new title and registration.
5 Pay Applicable Fees The recipient pays title transfer and registration fees but is exempt from sales tax when the gift affidavit is properly submitted.

Necessary Forms and Documentation

The following forms and documents are essential when gifting a car in Illinois:

  • Vehicle Title: Must be signed over by the donor with “Gift” indicated in the sale price section.
  • Form RUT-50 (Vehicle Use Tax Transaction Form): Used to claim exemption from sales tax for gifted vehicles.
  • Odometer Disclosure Statement: Required if the vehicle is less than 10 years old and the odometer reading is not on the title.
  • Proof of Identity: Valid Illinois driver’s license or state ID of the recipient.
  • Proof of Relationship: While not always mandatory, providing documents such as birth certificates or marriage certificates can support tax exemption claims if gifting to family members.

Understanding Tax Implications When Gifting a Vehicle

Illinois law provides specific tax exemptions when a vehicle is gifted, but it is important to meet all criteria to avoid unexpected tax liabilities.

  • Exemption from Use Tax: When a vehicle is transferred as a gift, the recipient is generally exempt from paying the state’s 6.25% use tax, provided Form RUT-50 is submitted and the transfer is bona fide without any exchange of money.
  • Family Transfers: Gifts between immediate family members (spouses, parents, children, siblings, grandparents, grandchildren) are typically tax-exempt, but documentation of the relationship may be required.
  • Non-Family Transfers: Gifting to non-family members may not qualify for tax exemption unless it can be proven that no payment was made.
  • Potential Gift Tax: Illinois does not impose a separate gift tax on vehicle transfers, but federal gift tax laws may apply if the vehicle’s value exceeds federal thresholds.

Additional Considerations and Tips

To ensure a smooth gifting process, consider the following points:

  • Always verify that the vehicle title is clear of liens before gifting.
  • Keep copies of all documents submitted to the Illinois Secretary of State for your records.
  • Ensure the recipient obtains insurance coverage for the gifted vehicle before driving.
  • If the donor has lost the title, apply for a duplicate title before attempting to gift the car.
  • Consider consulting a legal or tax professional if the vehicle’s value is significant or if complex family arrangements exist.

Expert Insights on How To Gift A Car In Illinois

Linda Martinez (Illinois DMV Compliance Specialist). When gifting a car in Illinois, it is essential to complete the title transfer correctly by signing the title over to the recipient and noting it as a gift. The donor must also submit a Statement of Gift Tax Exemption to avoid paying the vehicle use tax typically required during registration.

James O’Connor (Automotive Attorney, Chicago Legal Advisors). From a legal standpoint, gifting a car in Illinois requires careful documentation to protect both parties. Besides the signed title, I recommend drafting a simple gift affidavit to clarify that the vehicle is a gift and not a sale, which can help prevent future disputes or liability issues.

Dr. Emily Chen (Certified Public Accountant, Illinois Tax Consultants). It is important to understand the tax implications when gifting a car in Illinois. While the recipient may be exempt from the use tax, the donor should be aware of any potential gift tax reporting requirements at the federal level, especially for vehicles of significant value.

Frequently Asked Questions (FAQs)

What documents are required to gift a car in Illinois?
You need the vehicle’s title signed over to the recipient, a completed Vehicle Transaction Affidavit (VTA), and a valid government-issued ID. A bill of sale is not required for gifting.

Is there a fee for gifting a car in Illinois?
There is no title transfer fee when gifting a vehicle to an immediate family member. However, non-family recipients may be subject to standard title transfer fees and taxes.

Do I need to pay sales tax when gifting a car in Illinois?
No sales tax is due if the vehicle is gifted to an immediate family member, such as a spouse, parent, child, or sibling. For others, use tax may apply based on the vehicle’s fair market value.

How do I complete the title transfer when gifting a car?
The current owner must sign the title over to the recipient, including the odometer disclosure if applicable. Both parties should complete the Vehicle Transaction Affidavit and submit these documents to the Illinois Secretary of State.

Can I gift a car without a title in Illinois?
No. Illinois law requires a valid title to transfer ownership of a vehicle. If the title is lost, you must apply for a duplicate title before gifting.

Are there any special considerations for gifting a car to a minor in Illinois?
Yes. If the recipient is under 18, a parent or legal guardian typically must co-sign the title transfer documents, and the minor may need a guardian’s consent to register the vehicle.
Gifting a car in Illinois involves several important steps to ensure the transfer of ownership is legally compliant and smooth. The process typically requires completing the vehicle’s title transfer, including signing the title over to the recipient, and submitting a completed Bill of Sale or Gift Affidavit to document the nature of the transfer. The recipient must also apply for a new title and registration with the Illinois Secretary of State, providing necessary identification and paying any applicable fees, although gift transfers may be exempt from certain taxes.

It is essential to understand the tax implications when gifting a vehicle in Illinois. While the state often waives the motor fuel tax and use tax for gifts between family members, proper documentation such as the Gift Affidavit is crucial to avoid unexpected tax liabilities. Additionally, both the giver and recipient should ensure that the vehicle has no outstanding liens and that all required inspections or emissions tests are up to date before completing the transfer.

Overall, gifting a car in Illinois requires careful attention to the legal requirements and documentation to facilitate a seamless transaction. By following the prescribed steps and verifying all necessary paperwork, both parties can avoid potential delays or complications. Consulting with the Illinois Secretary of State’s office or a legal professional can provide further guidance tailored to specific situations

Author Profile

Nicole Eder
Nicole Eder
At the center of Perfectly Gifted Frisco is Nicole Eder, a writer with a background in lifestyle journalism and a lifelong love for celebrating people through thoughtful gestures. Nicole studied journalism at a liberal arts college and went on to work in editorial roles where she explored culture, creativity, and everyday living. Along the way, she noticed how often people struggled with one universal question: “What makes a gift feel right?”

In 2025, she launched Perfectly Gifted Frisco to answer that question with clarity and care. Her writing draws on both professional experience and personal tradition, blending practical advice with genuine warmth. Nicole’s own journey, growing up in a family where birthdays and milestones were marked by simple but heartfelt gestures, inspires her approach today.