Definition: A tax that is assessed on property that is passed from one generation to a generation that is two or more levels below the generation of the person who is making the transfer.

For example, a transfer of property from a grandparent to a grandchild would be subject to the generation skipping transfer tax. In addition, a transfer from one person to an unrelated person who is 37 1/2 years or more younger than the person making the transfer is subject to the generation skipping transfer tax.

In 2009 the federal government exempted transfers of up to $3,500,000 from the generation skipping transfer tax, but the tax was repealed on January 1, 2010, only to reappear on January 1, 2011, with a $5,000,000 exemption. For years 2012 and beyond, the exemption will be indexed for inflation, so the 2012 exemption was $5,120,000, the 2013 exemption is $5,250,000, and the 2014 exemption will be $5,340,000. Some states also assess a generation skipping transfer tax.

Refer to Exemption From Federal Generation Skipping Transfer Taxes: 1997 - 2014 for a chart that shows how the generation skipping transfer tax exemption has changed over the years.
Other Terms Beginning With G
Also Known As: GSTT