2022 GST Exemption
For 2022, the GST Exemption figures are $12,060,000 (Lifetime GST exemption) and 40% (Top GST tax rate).
Effective 2022-01-01Source: 2022 Instructions for Form 709 (IRS)Verified 2026-09-03
Compared with 2021
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Lifetime GST exemption | $11,700,000 | $12,060,000 | +$360,000 (+3.1%) |
| Top GST tax rate | 40% | 40% | +0% (+0.0%) |
Who it applies to
Individuals making gifts or transfers subject to the generation-skipping transfer tax during calendar year 2022
What changed this year, and why
The lifetime generation-skipping transfer (GST) exemption for 2022 is $12,060,000. This amount represents the total value of property an individual may transfer to skip persons (beneficiaries at least two generations below the transferor, such as grandchildren) free of GST tax over the individual's lifetime. The exemption applies to both transfers made during life and transfers taking effect at death. An allocation of GST exemption to specific transfers is irrevocable.
Common questions
- What is the GST tax?
- The generation-skipping transfer (GST) tax is imposed on transfers to beneficiaries who are two or more generations below the transferor, such as grandchildren.
- Is the GST exemption automatically applied?
- A portion of the unused exemption is automatically allocated to the property transferred. The donor may elect out of this automatic allocation by filing Form 709 and attaching a statement clearly describing the transaction and the extent of the election.
- Can the exemption allocation be revoked?
- No. Once made, an allocation of GST exemption cannot be changed.
Which transfers the GST tax reaches
The generation-skipping transfer (GST) tax reported on Form 709 applies only to inter vivos direct skips. A direct skip is a transfer made during the donor's lifetime that satisfies all three of the following conditions: it is subject to the gift tax, it involves an interest in property, and it is made to a skip person. All three requirements must be met before the gift becomes subject to the GST tax. A gift is considered subject to the gift tax if it must be listed on Schedule A of Form 709. The donor has a lifetime GST exemption of $12,060,000 for 2022 that can be applied against these transfers. Even a nontaxable gift that qualifies as a direct skip to a trust for an individual's benefit is subject to the GST tax unless, during the beneficiary's lifetime, no corpus or income may be distributed to anyone other than the beneficiary and the trust assets would be included in the beneficiary's gross estate if the beneficiary dies before the trust terminates.
The GST tax you must report on Form 709 is that imposed only on inter vivos direct skips. An inter vivos direct skip is a transfer that is: • Subject to the gift tax, • Of an interest in property, and • Made to a skip person. All three requirements must be met before the gift is subject to the GST tax.
2022 Instructions for Form 709 (IRS)
The exemption allocates itself to direct skips unless you elect out
When a donor makes an inter vivos direct skip, the IRS does not wait for the donor to act. A portion of the donor's unused GST exemption is automatically allocated to the transferred property unless the donor affirmatively elects otherwise. This automatic allocation is the default rule; if the donor does nothing, the exemption applies on its own. To opt out, the donor must file Form 709 and attach a statement that clearly describes the transaction and states 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 lifetime GST exemption for 2022 is $12,060,000, so a donor with a large unused exemption may want to consider whether automatic allocation serves their planning goals or whether an election out is preferable.
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. To elect out of the automatic allocation of exemption, you must file Form 709 and attach a statement to it clearly describing the transaction and the extent to which the automatic allocation is not to apply. Reporting a direct skip on a timely filed Form 709 and paying the GST tax on the transfer will prevent an automatic allocation.
2022 Instructions for Form 709 (IRS)
Allocating the exemption is a one-way decision
Once a donor allocates GST exemption to a transfer, that decision is final. The instructions state plainly that an allocation is irrevocable, meaning the donor cannot undo it, revise the amount, or redirect the exemption to a different transfer at a later date. This rule applies whether the allocation was made on Form 709 during the donor's lifetime or by the executor on Form 706 for transfers taking effect at death. Because the allocation is a one-way decision, the donor should consider carefully how much of the $12,060,000 lifetime GST exemption for 2022 to apply to any given transfer. Once applied, those exemption dollars are committed and cannot be reclaimed or shifted to shelter other transfers from the generation-skipping transfer tax.
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.
2022 Instructions for Form 709 (IRS)
Allocating to a transfer not reported on this return
A donor may need to allocate GST exemption to transfers that were made in prior years or are not otherwise reported on the current Form 709. This is commonly called a late allocation. To do so, the donor must attach a statement to Form 709 and title it "Notice of Allocation." The notice must include 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. The total of all exemption allocations is entered on line 6. With the 2022 lifetime GST exemption of $12,060,000, donors with prior-year transfers may use this process to allocate unused exemption retroactively.
To allocate your exemption to such transfers, attach a statement to this Form 709 and entitle it “Notice of Allocation.” The notice must contain the following for each trust (or other transfer). • Clear identification of the trust, including the trust's EIN, if known. • If this is a late allocation, the year the transfer was reported on Form 709. • The value of the trust assets at the effective date of the allocation. • The amount of your GST exemption allocated to each gift (or a statement that you are allocating exemption by means of a formula such as “an amount necessary to produce an inclusion ratio of zero”). • The inclusion ratio of the trust after the allocation.
2022 Instructions for Form 709 (IRS)
A higher exemption in a later year does not reach back to cover an earlier transfer
For 2022, the lifetime GST exemption is $12,060,000. In general, each annual increase can only be allocated to transfers made (or appreciation occurring) during or after the year of the increase. This means a higher exemption in a later year does not reach back to shelter transfers made in an earlier year when the exemption was lower. For example, a donor who made $1,750,000 in direct-skip GSTs through 2005 and allocated all $1,500,000 of the exemption available then cannot later use the larger 2022 exemption to cover those pre-2022 transfers. However, if a transfer to a trust was not a direct skip but could produce GSTs in the future, the donor may allocate the increased exemption to that trust even without additional contributions, because the trust remains open for future generation-skipping.
In general, each annual increase can only be allocated to transfers made (or appreciation occurring) during or after the year of the increase. Example. A donor made $1,750,000 in direct-skip GSTs through 2005, and allocated all $1,500,000 of the exemption to those transfers. In 2022, the donor makes a $2,000,000 taxable GST. The donor can allocate $2,000,000 of exemption to the 2022 transfer but cannot allocate the $8,560,000 of unused 2022 exemption to pre-2022 transfers.
2022 Instructions for Form 709 (IRS)
Unused exemption does not just sit there, it gets allocated automatically
Under federal law, when a donor makes an inter vivos direct skip, a portion of the donor's unused exemption is automatically allocated to the transferred property unless the donor elects otherwise. For 2022, the lifetime GST exemption is $12,060,000. To elect out of this automatic allocation, the donor must file Form 709 and attach a statement clearly describing the transaction and the extent to which the automatic allocation is not to apply. Reporting a direct skip on a timely filed Form 709 and paying the GST tax on the transfer will also prevent an automatic allocation. This ensures that unused exemption does not simply remain available indefinitely but is put to work reducing or eliminating GST tax on current transfers.
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.
2022 Instructions for Form 709 (IRS)
A gift under the annual exclusion is not automatically safe from GST tax
This is true even if the transfer is less than the $16,000 annual exclusion for 2022. A gift that falls within the annual exclusion is not automatically exempt from GST tax in the future; if the property later passes to a skip person outside the annual exclusion, GST tax may be owed at that time. To protect against this, a donor may choose to apply a portion of the $12,060,000 lifetime GST exemption to the transfer on the current return or on a Notice of Allocation. However, a GST exemption may also be automatically allocated to the gift if the trust that receives it is a GST trust as defined under section 2632(c).
Certain transfers, particularly transfers to a trust, that are not subject to gift tax and are therefore not subject to the GST tax on Form 709 may be subject to the GST tax at a later date. This is true even if the transfer is less than the $16,000 annual exclusion.
2022 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.
2022 Instructions for Form 709 (IRS)
- Lifetime GST exemption
Every donor is allowed a lifetime GST exemption. The amount of the exemption for 2022 is $12,060,000.
- Top GST tax rate
The top rate for gifts and generation- skipping transfers remains at 40%.