When someone passes away, their loved ones are often left with more than just grief—they must also navigate the legal and financial aspects of the estate. One common concern is estate taxes, which can affect how much of the deceased person’s assets are passed on to heirs. In New Jersey, estate taxation has changed significantly in recent years, and understanding the current rules is essential for effective estate planning. So, do you owe estate taxes in New Jersey? Here’s what you need to know.
New Jersey No Longer Has an Estate Tax (as of 2018)
Historically, New Jersey was one of the few states that imposed both estate tax and inheritance tax. However, that changed in 2018 when New Jersey repealed its estate tax entirely.
As of today:
- There is no New Jersey estate tax on individuals who died on or after January 1, 2018
- This means that no matter the size of the estate, New Jersey does not require an estate tax return to be filed with the state
This repeal was part of a tax reform bill that aimed to reduce the burden on residents and retirees and encourage them to remain in the state rather than relocating to more tax-friendly areas.
But New Jersey Still Has an Inheritance Tax
While the estate tax is gone, New Jersey’s inheritance tax is still in effect. This tax is based not on the value of the estate itself but on who inherits the assets and how closely they were related to the deceased.
There are several classes of beneficiaries:
Class A: Includes spouses, children, grandchildren, parents, and grandparents.
- Tax rate: 0% — fully exempt from inheritance tax
Class C: Includes siblings, sons-in-law, and daughters-in-law.
- Tax rate: Starts at 11% and increases depending on the amount inherited
Class D: All other beneficiaries, such as friends, cousins, or unmarried partners.
- Tax rate: Starts at 15% and increases up to 16%
Class E: Charitable organizations and certain public institutions.
- Tax rate: 0% — fully exempt
If a Class C or D beneficiary receives more than $500, they may be required to file a New Jersey inheritance tax return and pay the applicable tax.
What About Federal Estate Taxes?
Although New Jersey no longer has a state-level estate tax, federal estate tax laws may still apply. However, they only affect very large estates.
- For 2025, the federal estate tax exemption is $13.61 million per individual
- Estates below that amount do not owe federal estate tax
- For married couples, the exemption can be doubled with proper planning, totaling up to $27.22 million
Unless the estate is exceptionally large, most New Jersey residents will not owe any federal estate tax.
Estate Planning Considerations
Even if you are not subject to estate or inheritance taxes, estate planning is still essential. Key reasons include:
- Ensuring a smooth transfer of assets
- Avoiding family disputes
- Reducing probate costs
- Protecting beneficiaries with trusts
- Naming guardians for minor children
If inheritance tax could apply to your beneficiaries, an estate planning attorney can help you structure gifts, trusts, or charitable donations to reduce or eliminate tax liability.
Filing and Payment Deadlines
If an inheritance tax return is required:
- The return is due within 8 months of the date of death
- Taxes owed must be paid at that time to avoid interest and penalties
- Extensions may be requested, but they do not delay tax payment deadlines
The return should be filed with the New Jersey Division of Taxation, Inheritance and Estate Tax Branch.
Conclusion
New Jersey no longer imposes a state estate tax, which has simplified estate planning for many residents. However, the inheritance tax still applies, depending on who receives the inheritance and how much they receive. In most cases, close family members are exempt, but others may face tax obligations. Knowing the rules—and planning ahead—can save your heirs time, money, and legal complications. If you’re unsure about your situation, consult a New Jersey estate planning attorney to protect your legacy and ensure your wishes are honored.