New Jersey's tax on death works differently from most states. It has no estate tax any more, but it still taxes what certain heirs receive, and the rate depends on whether the heir is a spouse or child, a sibling, or anyone else.
This guide explains the four beneficiary classes, gives the rate bands for each, shows worked examples for different heirs and covers what happened to the estate tax. It follows the New Jersey Division of Taxation.
New Jersey imposes an inheritance tax on the transfer of assets from a deceased person to a beneficiary. The amount depends on who the beneficiary is and how they are related to the decedent, the date-of-death value of the assets, what kind of assets they are and whether the decedent lived in New Jersey. Where the beneficiary lives is not a factor.
The state's estate tax is a different tax, and it is gone. The Division of Taxation says New Jersey Estate Tax is no longer imposed for individuals who died on or after January 1, 2018. It was phased out in two steps: the exemption was capped at $675,000 for deaths on or before December 31, 2016, and was $2 million for deaths in 2017.
| Class | Who is in it (per the Division's chart) | Tax |
|---|---|---|
| Class A | Spouse, civil union partner, domestic partner, parent, grandparent, child (including legally adopted), stepchild, mutually acknowledged child, grandchild and great-grandchild | No tax is due |
| Class C | Brother or sister; spouse or surviving spouse of a child; civil union partner of a child | 11% to 16% after a $25,000 exemption |
| Class D | Anyone not included in Classes A, C or E (for example nieces, nephews, cousins and friends) | 15% on the first $700,000, 16% above |
| Class E | Including, but not limited to, qualified charities, religious institutions, educational and medical institutions, non-profit benevolent or scientific institutions and the State of New Jersey and its political subdivisions | Exempt |
The Division's chart is the authority for who falls in which class, including the dates after which civil union and domestic partners count. Check it for unusual relationships such as step-grandchildren, who are not included in the stepchild category.
| Class | Portion of the inheritance | Rate |
|---|---|---|
| A | All | No tax is due |
| C | First $25,000 | No tax is due |
| C | Next $1,075,000 | 11% |
| C | Next $300,000 | 13% |
| C | Next $300,000 | 14% |
| C | Over $1,700,000 | 16% |
| D | First $700,000 | 15% |
| D | Over $700,000 | 16% |
The tax is figured separately for each beneficiary on the amount that person receives. It applies to almost anything a New Jersey resident decedent owned, including houses and real estate, bank accounts, stocks, bonds, cars and other tangible personal property. For a nonresident decedent, the tax can apply to certain property located in New Jersey, usually real estate.
The table shows the tax for one beneficiary receiving each amount, using the bands above.
| Amount received | Class A | Class C (e.g. a sibling) | Class D (e.g. a friend) |
|---|---|---|---|
| $25,000 | $0 | $0 | $3,750 |
| $100,000 | $0 | $8,250 | $15,000 |
| $500,000 | $0 | $52,250 | $75,000 |
| $1,000,000 | $0 | $107,250 | $153,000 |
| $1,500,000 | $0 | $171,250 | $233,000 |
For example, a sibling who receives $500,000 pays 11% on $475,000 (the amount above the $25,000 exemption), which is $52,250.00. A friend receiving $1,000,000 pays 15% on $700,000 plus 16% on $300,000, which is $153,000.00. These are illustrations; they ignore debts, exemptions and deductions that reduce the taxable amount, and the Division's forms and guidance control.
Because the tax is per beneficiary and by class, who inherits matters more than the size of the estate. A bequest to a spouse or child is untaxed, while the same amount to a friend is taxed from the first dollar at 15%. Other states have different rules: see our state estate tax guide and our New Jersey income tax guide. For the federal estate tax, see our federal estate tax exemption guide.
NJ Division of Taxation: Inheritance and Estate Tax, NJ Division of Taxation: Inheritance Tax Rates, NJ Division of Taxation: Beneficiary classes chart.
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