How the generation-skipping transfer tax is figured
When you give property to a grandchild or another skip person, the federal generation-skipping transfer (GST) tax under 26 U.S.C. 2601 and following applies on top of the ordinary gift or estate tax, so that a generation is not simply passed over untaxed. Unlike the graduated estate and gift rates, the GST tax is a flat rate equal to the maximum federal estate tax rate under 26 U.S.C. 2641, applied to the taxable amount after any GST exemption you allocate.
This calculator subtracts the annual exclusion you applied, allocates the GST exemption you still have available, and multiplies the remainder by the flat rate. It also reports how much exemption is left and the effective rate on the whole transfer, which is useful when you are deciding how much exemption to allocate this year versus keeping in reserve.
Figures shown are on a 2026 basis. The GST exemption and the annual exclusion are indexed for inflation and have been changed by legislation more than once, which is why both are editable fields rather than fixed constants. Confirm the current amounts in the latest IRS revenue procedure and the Form 709 instructions. This tool is an estimate only, not tax advice: trust structures, reverse QTIP elections, the predeceased parent rule and automatic allocation rules can change the result substantially, so work with a tax professional before filing.
Frequently asked questions
Under 26 U.S.C. 2613 a skip person is generally someone two or more generations below the transferor, such as a grandchild, or a trust whose beneficiaries are all skip persons. Unrelated individuals are measured by age difference instead of family line.
Yes. A direct skip can trigger gift tax and GST tax on the same transfer. This tool estimates only the GST layer, so add any gift tax computed separately on Form 709.
The GST exemption and the annual exclusion are indexed for inflation and have been changed by legislation. Enter the figure from the current IRS revenue procedure rather than relying on the default value shown here.