2026 tax year
Generation-skipping transfer tax calculator
Leave wealth to a grandchild above the exemption and it can be taxed twice, this is the second layer.
The generation-skipping transfer (GST) tax is a flat 40% on transfers to a "skip person"a grandchild, or anyone more than 37½ years younger, above the GST exemption, which is $15,000,000 for 2026. It is a separate allowance from the estate and gift exemption, and crucially it applies on top of any gift or estate tax on the same transfer. This estimates it.
A grandchild, or anyone 37½+ years younger.
Enter the transfer amount.
Worked example, $20,000,000 to grandchildren
A grandparent leaves $20,000,000 directly to grandchildren, having used no GST exemption before:
| Figure | Amount |
|---|---|
| Transfer | $20,000,000 |
| GST exemption available | $15,000,000 |
| Taxable amount | $5,000,000 |
| GST tax (40%) | $2,000,000 |
The $5,000,000 above the exemption draws $2,000,000 of GST tax. And that is on top of the estate or gift tax the same transfer owes. A transfer that clears both the estate exemption and the GST exemption can therefore face 40% twice, an effective rate far above 40%, which is exactly the outcome the tax is designed to create.
Questions
What is a "skip person"?
A person two or more generations below you, a grandchild or great-grandchild, or an unrelated person more than 37½ years younger. A gift or bequest to a skip person can trigger the GST tax. Transfers to a grandchild whose parent (your child) has already died generally move up a generation and are not skips.
Why does the GST tax exist?
To stop wealthy families avoiding a round of estate tax by leaving money directly to grandchildren, skipping the child's generation (and the estate tax that would apply when the child later died). The GST tax imposes that missing layer, hence being on top of the regular estate or gift tax.
How is the GST exemption used?
Everyone has a $15,000,000 GST exemption for 2026, separate from the estate/gift exemption but the same size. It can be allocated to transfers or to trusts (making a trust "GST-exempt" so future distributions to skip persons are shielded). Careful allocation is a core estate-planning task.
Does the annual gift exclusion help?
Yes, direct gifts to a grandchild within the $19,000 annual gift exclusion are also generally free of GST tax, and tuition or medical payments made directly to the institution are exempt entirely. The GST tax bites on large transfers above these, not on ordinary gifts.
Related tools
- Estate tax calculator the first layer
- Gift tax calculator lifetime gifts
- Trust income tax calculator GST-exempt trusts
Estimate for the 2026 tax year. The GST tax is in addition to gift or estate tax. Not tax or legal advice.