877 / What is the GST exemption and how is it applied in determining the GST tax?
In 2004 to 2009, the GST exemption was equal to the estate tax unified credit equivalent (applicable exclusion amount) rather than to $5 million, as indexed. Any indexing increase in the GST exemption is available for all generation-skipping transfers occurring in the year of the increase and subsequent years in which the GST exemption is equal to $5 million, as indexed, up to the year of the decedent’s death.2
The GST tax was repealed (zero percent) for one year in 2010. The Tax Relief Act of 2010 revived the GST tax and included a $5 million GST exemption that was scheduled to last for two years, 2011 and 2012, with indexing for 2012 (to $5.12 million). ATRA made the $5 million (as indexed) GST exemption permanent for tax years beginning after 2012. The 2017 Tax Act increased the GST exemption amount to a $10 million base amount, which is indexed for inflation). This expanded exemption will apply from 2018-2025 absent Congressional action to prevent its expiration.3
In general, an individual or the individual’s executor may allocate the GST exemption at any time from the date of the transfer until the time for filing the individual’s federal estate tax return (including extensions actually granted), regardless of whether a return is required (see Q 867).4