2020 GST Exemption
The 2020 GST Exemption is $11,580,000.
Effective 2020-01-01Source: 2020 Instructions for Form 709 (IRS)Verified 2026-08-29
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Lifetime GST exemption | $11,400,000 | $11,580,000 | +$180,000 (+1.6%) |
Who it applies to
Donors who make gifts or other transfers subject to the federal generation-skipping transfer (GST) tax, including transfers to skip persons such as grandchildren or more remote descendants.
What changed this year, and why
The lifetime GST exemption increased to $11,580,000 for 2020, up from $11,400,000 in 2019.
Common questions
- What is the lifetime GST exemption for 2020?
- The lifetime GST (generation-skipping transfer) exemption for 2020 is $11,580,000. This is the amount each donor may allocate over their lifetime to shield transfers to skip persons (such as grandchildren) from the federal GST tax.
Which transfers the GST tax reaches
The GST tax applies specifically to inter vivos direct skips, which are transfers made during the donor's lifetime that meet three requirements: the transfer must be subject to gift tax, it must involve an interest in property, and it must be made to a skip person. A transfer qualifies as subject to gift tax if it must be reported on Schedule A of Form 709 under the gift tax rules. The term "skip person" refers to a beneficiary who is two or more generations below the donor's generation, such as a grandchild. All three conditions must be satisfied before a transfer becomes subject to GST tax reporting requirements. This means that not all gifts to younger generations trigger GST tax - only those that meet the specific criteria of being taxable gifts of property interests to skip persons.
You must report on Form 709 the GST tax imposed on inter vivos direct skips. An inter vivos direct skip is a transfer made during the donor's lifetime that is: • Subject to the gift tax, • Of an interest in property, and • Made to a skip person.
2020 Instructions for Form 709 (IRS)
The exemption allocates itself to direct skips unless you elect out
For inter vivos direct skips, the IRS automatically allocates a portion of the donor's unused GST exemption to the transferred property unless the donor specifically elects out. This automatic allocation happens by default - you don't need to take any action for it to occur. If you want to prevent this automatic allocation, you must file Form 709 and attach a statement that clearly describes the transaction and specifies the extent to which the automatic allocation should not apply. Alternatively, reporting the direct skip on a timely filed Form 709 and paying the GST tax on the transfer will also prevent the automatic allocation. The automatic allocation rule ensures that transfers to skip persons receive the benefit of the GST exemption without requiring manual allocation, but you retain control to opt out if your planning goals require a different approach to using your exemption.
In the case of inter vivos direct skips, a portion of the donor's unused exemption is automatically allocated to the transferred property unless the donor elects otherwise.
2020 Instructions for Form 709 (IRS)
Allocating the exemption is a one-way decision
Once you allocate GST exemption to a transfer, that decision is final and cannot be undone. The donor can apply this exemption to inter vivos transfers made during life on Form 709, and the executor can apply the exemption on Form 706 to transfers taking effect at death. Regardless of which form is used or when the allocation is made, the allocation is irrevocable. This means you cannot later increase, decrease, or reallocate the exemption to a different transfer once you have committed it. The irrevocable nature of the allocation requires careful planning - you must decide how much of your $11,580,000 lifetime GST exemption to use and which transfers should receive it, because any allocation decision becomes permanent the moment it is made.
The donor can apply this exemption to inter vivos transfers (that is, transfers made during the donor's life) on Form 709. The executor can apply the exemption on Form 706 to transfers taking effect at death. An allocation is irrevocable.
2020 Instructions for Form 709 (IRS)
Allocating to a transfer not reported on this return
You may need to allocate GST exemption to transfers that were not reported on the current Form 709, such as when making a late allocation to a prior-year transfer. To do this, you must attach a statement to Form 709 and entitle it "Notice of Allocation." The notice must contain specific information for each trust or other transfer: clear identification of the trust including its EIN if known, the year the transfer was originally reported on Form 709 if this is a late allocation, the value of the trust assets at the effective date of the allocation, the amount of GST exemption allocated to each gift (or a formula statement such as "an amount necessary to produce an inclusion ratio of zero"), and the inclusion ratio of the trust after the allocation. You must total all exemption allocations and enter this total on line 6 of the return. This process allows you to allocate exemption to transfers after the fact, but the allocation remains irrevocable once made.
You may wish to allocate GST exemption to transfers not reported on this return, such as a late allocation. To allocate your exemption to such transfers, attach a statement to this Form 709 and entitle it “Notice of Allocation.”
2020 Instructions for Form 709 (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2020 Instructions for Form 709 (IRS)
- Lifetime GST exemption
Every donor is allowed a lifetime GST exemption. The amount of the exemption for 2020 is $11,580,000.