• Generation Skip Transfer Tax (GSTT) is a federal tax that arises when property is transferred by gift or inheritance to a beneficiary (other than spouse) who is at least 37.5 years younger than the donor.

  • GSTT effectively closed a loophole where wealthy people could legally give money and bequeath property to their grandchildren without paying federal property taxes.
  • The GSTT tax rate is 40%.
  • Most people will never encounter GSTT due to the high threshold: the tax only applies if the transfer amount exceeds $12.06 million per person (as of 2022).