2025 GST Exemption
For 2025, the GST Exemption figures are $13,990,000 (Lifetime GST exemption) and 40% (Top GST tax rate).
Effective 2025-01-01Source: 2025 Instructions for Form 709 (IRS)Verified 2026-09-03
Compared with 2024
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Lifetime GST exemption | $13,610,000 | $13,990,000 | +$380,000 (+2.8%) |
| Top GST tax rate | 40% | 40% | +0% (+0.0%) |
Who it applies to
Donors who make transfers subject to the federal generation-skipping transfer tax.
What changed this year, and why
The lifetime generation-skipping transfer (GST) exemption is $13,990,000 for 2025.
Common questions
- What does the GST exemption do?
- The lifetime GST exemption is the amount a person can shield from generation-skipping transfer tax. The GST tax is a separate tax that applies when property is transferred to a beneficiary who is more than one generation below the transferor (for example, a grandchild). Every donor has a single lifetime GST exemption that can be allocated to transfers made during life or at death. Any exemption not used in prior years is available in 2025.
- Is the GST exemption indexed for inflation?
- The 2025 GST exemption of $13,990,000 was published by the IRS in Revenue Procedure 2024-40 and is the amount that applies to transfers made in calendar year 2025.
Every amount on this page is a published figure rather than yours. The GST exemption headroom takes the number you enter and works it out against them, showing which published figure it used.
Which transfers the GST tax reaches
The GST tax applies only to inter vivos direct skips - transfers made during the donor's lifetime. To qualify as an inter vivos direct skip, a transfer must meet all three of these requirements: it must be subject to the gift tax, it must be of an interest in property, and it must be made to a skip person. A transfer is subject to the gift tax if it is required to be reported on Schedule A of Form 709. This means that transfers to political organizations, transfers to certain exempt organizations, and transfers that qualify for the medical or educational exclusion are generally not subject to the GST tax because they are not required to be reported as taxable gifts. The GST tax does not apply to testamentary direct skips (transfers at death) or to indirect skips, which are covered by different rules.
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.
2025 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 - a transfer during life to a skip person that is subject to the gift tax - the IRS automatically applies a portion of the donor's unused GST exemption to that transfer unless the donor elects out. The automatic allocation aims to bring the inclusion ratio of the transferred property to zero. To opt out, the donor must file Form 709 and attach a statement that clearly identifies the transaction and states how much of the automatic allocation should not apply. There is another way to block the automatic allocation: if the donor reports the direct skip on a timely filed Form 709 and pays any GST tax due on the transfer, no exemption will be allocated automatically. The donor may also make a manual allocation of exemption to other transfers, including indirect skips and transfers not reported on the current return, by filing a Notice of Allocation with the return.
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.
2025 Instructions for Form 709 (IRS)
Allocating the exemption is a one-way decision
A donor may apply GST exemption to lifetime transfers on Form 709, and an executor may apply it to transfers that take effect at death on Form 706. Once exemption has been allocated to a particular transfer, the decision cannot be undone. The donor cannot later reclaim the exemption and redirect it to another transfer, nor can the donor reduce the allocation if the value of the trust changes. This one-way character means that taxpayers should decide carefully how much exemption to commit to each gift, especially when the total exemption available - $13,990,000 for 2025 - is being divided among multiple transfers. The irrevocability rule applies to both automatic allocations (those the IRS assigns on its own to direct skips) and to allocations the donor chooses to make by filing a Notice of Allocation.
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.
2025 Instructions for Form 709 (IRS)
Allocating to a transfer not reported on this return
When allocating GST exemption to transfers not reported on the current Form 709 - such as a late allocation for a prior-year transfer - the donor must attach a separate statement titled "Notice of Allocation." The notice must include for each trust or transfer: clear identification of the trust including its EIN if known, the year the transfer was originally reported 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 resulting inclusion ratio of the trust. The total exemption allocations must be entered on line 6.
Notice of Allocation. 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).
2025 Instructions for Form 709 (IRS)
A higher exemption in a later year does not reach back to cover an earlier transfer
When the GST exemption increases from one year to the next - for example, rising to $13,990,000 for 2025 - the additional amount cannot be applied retroactively to transfers that occurred before the increase took effect. Each year's higher exemption is available only for transfers made during or after that year, or for appreciation on trust assets occurring during or after that year. This means a donor who made generation-skipping transfers in earlier years, when the exemption was lower, cannot go back and allocate the newer, larger exemption to those prior transfers. The rule prevents taxpayers from using a current-year exemption to shield past transfers that were already completed under a smaller exemption amount. Taxpayers must plan their allocations knowing that any unused portion of a prior year's exemption remains tied to that year and cannot be revived by a subsequent increase.
In general, each annual increase can only be allocated to transfers made (or appreciation occurring) during or after the year of the increase.
2025 Instructions for Form 709 (IRS)
Unused exemption does not just sit there, it gets allocated automatically
When a donor makes an inter vivos direct skip - a transfer to a skip person during the donor's lifetime - a portion of the donor's unused GST exemption is automatically allocated to the transferred property. The 2025 lifetime GST exemption is $13,990,000, and any unused portion does not simply remain available for future manual allocation. Instead, the IRS applies it automatically to direct-skip transfers unless the donor affirmatively elects otherwise. To opt 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 should not apply. Alternatively, reporting the direct skip on a timely filed Form 709 and paying any GST tax due on the transfer will also prevent the automatic allocation from taking effect. Without such affirmative steps, the exemption flows automatically to the transferred property, which may or may not be the donor's intended use of that exemption. This rule ensures that unused exemption is put to work rather than wasted, but it also means donors must actively manage their allocations if they want a different outcome.
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.
2025 Instructions for Form 709 (IRS)
A gift under the annual exclusion is not automatically safe from GST tax
Under the 2025 generation-skipping transfer tax rules, a gift that qualifies for the annual exclusion is not automatically free from GST tax consequences. The IRS instructions warn that certain transfers, particularly those to trusts, may avoid gift tax at the time of the transfer but can still become subject to the GST tax at a later date. This remains true even when the transfer is less than the $19,000 annual exclusion amount. For example, a donor who contributes to an irrevocable trust for the benefit of grandchildren may owe no gift tax in the year of the gift because the contribution falls within the annual exclusion, but if the trust later makes a distribution to or for the benefit of a skip person, GST tax could apply. The instructions suggest that in such cases, the donor may want to affirmatively allocate GST exemption to the transfer on Form 709 or on a Notice of Allocation, rather than relying solely on the annual exclusion to protect the transfer from future GST tax.
Caution: 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 $19,000 annual exclusion.
2025 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.
2025 Instructions for Form 709 (IRS)
- Lifetime GST exemption
Every donor is allowed a lifetime GST exemption. The amount of the exemption for 2025 is $13,990,000.
- Top GST tax rate
The top rate for gifts and generation-skipping transfers remains at 40%.