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Generation-Skipping Tax Calculator
Estimate your federal GST tax liability, exemption used, and net transfer amount for direct skips, taxable distributions, and dynasty trusts. Updated with 2025 IRS exemption amounts.
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⚠️ Important: This calculator provides estimates for educational purposes only. GST tax planning involves complex rules and significant dollar amounts. Always work with a qualified estate planning attorney or CPA before making transfers.
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Please enter a valid transfer amount.
Total value of property being transferred to skip person(s)
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Exemption used cannot exceed $13,990,000.
Prior GST exemption allocated in lifetime gifts (0 if none used)
Determines who pays the GST tax and how it is calculated
Married couples can double the exemption by splitting gifts
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Please enter a valid annual exclusion amount.
$19,000 per donee per year (2025) is GST-tax-free
Estimated GST Tax Owed
$0
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Sources & Methodology
✓All figures are sourced directly from IRS publications and the Internal Revenue Code. The 2025 GST exemption and tax rate are verified against IRS Rev. Proc. 2024-40 and IRC Section 2601.
Statutory authority governing the generation-skipping transfer tax, including definitions of skip persons, taxable events, exemption allocation rules, and applicable rate
Methodology: Available exemption = Total GST exemption (single: $13,990,000 / married: $27,980,000) minus exemption already used. Taxable amount = Transfer amount minus annual exclusions applied, reduced by available exemption (floor at $0). GST tax = Taxable amount times 40% flat rate. For direct skips, the tax is in addition to any gift tax. Net transfer = Transfer amount minus GST tax owed.
⏱ Last reviewed: April 2026 — reflects 2025 IRS inflation adjustments
Generation-Skipping Tax: What It Is and How to Calculate It
The generation-skipping transfer (GST) tax is a federal tax on transfers of wealth that skip one or more generations — typically from grandparents directly to grandchildren or younger descendants. Without this tax, wealthy families could avoid estate tax at the children’s generation entirely by leaving assets directly to grandchildren. The GST tax closes this loophole with a flat 40% rate on top of any applicable gift or estate tax.
The GST tax was permanently enacted in 1986 and has been one of the most powerful tools in the federal estate and gift tax system. Understanding how it works is essential for anyone making significant transfers to skip persons or establishing dynasty trusts.
2025 GST Tax Key Numbers
Item
2025 Amount
Notes
GST Exemption (Individual)
$13,990,000
Indexed for inflation annually
GST Exemption (Married Couple)
$27,980,000
Gift-splitting election required
GST Tax Rate (Flat)
40%
Same as top estate & gift tax rate
Annual Exclusion per Donee
$19,000
GST-tax-free per recipient per year
Exemption Sunset Date
Dec 31, 2025
Reverts to ~$7M unless extended
Medical / Tuition Exclusion
Unlimited
Paid directly to institution
The Three Types of GST Taxable Events
1. Direct Skip
A transfer of property directly to a skip person that is also subject to gift or estate tax. Example: A grandparent gives $2,000,000 outright to a grandchild. The donor pays the GST tax. Formula: GST Tax = (Transfer − Annual Exclusion − Available Exemption) × 40%
2. Taxable Distribution
A distribution from a trust to a skip person when the trust is not itself a skip person. Example: An irrevocable trust distributes income to a grandchild. The recipient (skip person) pays the GST tax on the distribution.
3. Taxable Termination
A trust interest terminates and only skip persons hold interests or may receive distributions. Example: A child’s income interest in a trust ends and only grandchildren remain as beneficiaries. The trust pays the GST tax.
How the GST Exemption Works
Every individual has a lifetime GST exemption — $13,990,000 in 2025 — that can be allocated to transfers to skip persons to shelter them from GST tax permanently. The exemption is separate from the estate and gift tax exemption, though they share the same dollar threshold. Critically, the exemption must be allocated to a transfer — it does not apply automatically to all transfers.
Allocating GST exemption to a trust that holds appreciating assets is one of the most powerful estate planning strategies available. Once exemption is allocated, all future growth inside that trust can pass to grandchildren, great-grandchildren, and beyond — forever — without additional GST or estate tax.
The 2025 Sunset — Why Act Now
The elevated exemption created by the Tax Cuts and Jobs Act of 2017 is scheduled to expire on December 31, 2025. After that date, the exemption is projected to drop to approximately $7,000,000 per person unless Congress acts. The IRS has confirmed that gifts made before the sunset date will not be clawed back even if the exemption decreases. This creates a narrow window to lock in the higher exemption amount.
💡 Key planning tip: Direct payments for tuition and medical expenses paid directly to the institution are completely excluded from GST tax — with no dollar limit. This is one of the most efficient ways to transfer wealth to grandchildren without using any exemption or paying any tax.
Frequently Asked Questions
The federal GST tax exemption for 2025 is $13,990,000 per person, or $27,980,000 for married couples who elect to split gifts. This amount is adjusted annually for inflation. The elevated exemption is scheduled to sunset at the end of 2025 and drop to approximately $7,000,000 unless Congress extends it.
The federal GST tax rate is a flat 40% in 2025. This applies to the taxable amount of any direct skip, taxable distribution, or taxable termination that exceeds your available GST exemption. The 40% rate matches the top federal estate and gift tax rate and has been in effect since 2013.
A skip person is anyone two or more generations below the transferor. This includes grandchildren, great-grandchildren, and their descendants. Unrelated individuals who are more than 37.5 years younger than the donor also qualify as skip persons. Your children are non-skip persons. Trusts can be skip persons if all current beneficiaries are skip persons.
Key strategies to minimize or eliminate GST tax include: allocating your GST exemption to transfers at the time of the gift, using the $19,000 annual exclusion per donee per year (which is also GST-tax-free), making direct payments for tuition and medical expenses to institutions (unlimited and GST-free), and funding a dynasty trust with your remaining exemption to shelter all future growth from GST tax permanently.
A dynasty trust is an irrevocable trust designed to hold assets for multiple generations. By allocating your GST exemption to the trust at funding, all assets inside — and all future appreciation — can be distributed to grandchildren, great-grandchildren, and beyond without triggering GST tax or estate tax at each generation. States like South Dakota, Nevada, and Delaware have no rule against perpetuities, making them popular for dynasty trusts that can last indefinitely.
Yes. Under current law, the elevated GST exemption created by the Tax Cuts and Jobs Act of 2017 sunsets on January 1, 2026. The exemption would revert to approximately $7,000,000 adjusted for inflation. The IRS has confirmed that gifts completed before the sunset will not be subject to a clawback. Making large gifts before December 31, 2025 locks in the higher exemption permanently.
The estate and gift taxes apply when wealth passes between adjacent generations, such as parent to child. The GST tax is an additional layer of tax that applies when wealth skips one or more generations, such as grandparent directly to grandchild. Without the GST tax, families could avoid the estate tax at each generation by passing assets directly to grandchildren. The GST tax prevents this at a flat 40% rate, which can stack on top of gift or estate tax for the same transfer.
Several transfers are excluded from GST tax: the $19,000 annual exclusion per donee per year (2025), direct tuition payments to educational institutions (unlimited), direct medical payments to healthcare providers (unlimited), transfers within the GST exemption amount ($13,990,000 in 2025), and transfers to non-skip persons (children). Properly structured 529 plan contributions within the 5-year front-loading election can also be excluded.