Does New Jersey Have a State Inheritance Tax?

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New Jersey taxpayers pay some of the highest property taxes in the country. Complaining about taxes is a popular topic in the Garden State. In New Jersey, death means additional taxes. New Jersey law imposes a state inheritance tax on certain beneficiaries on any inheritance over a nominal sum. Each county has a surrogate's office that can answer questions pertaining to estate and inheritance matters.

Inheritance Tax Rates

  • As of 2011, New Jersey's inheritance tax in New Jersey varies between zero to 11 and 16 percent on tangible and intangible personal property and real estate. The inheritance tax rate depends on the decedent's relationship to the heir or the nonprofit status of a beneficiary. Inheritance amounts exceeding $500 are subject to tax.

Tax-Exempt Heirs or Beneficiaries

  • Property passing to the decedent's surviving spouse, registered domestic partner, civil union partner, parents, children, stepchildren or grandchildren is generally free from New Jersey inheritance tax. These individuals are referred to as Class A beneficiaries under New Jersey inheritance law.

    If the decedent leaves property in his will to a nonprofit charitable organization, educational institution, religious entity, library, hospital, the state of New Jersey or any of the state's political subdivisions, no inheritance tax is due.

Taxable Heirs and Beneficiaries

  • Any relatives other than Class A beneficiaries must pay state inheritance taxes if the inheritance exceeds a particular limit. Siblings and sons-in-law or daughters-in-law may receive up to $25,000 from the decedent without incurring tax. Above that amount, the inheritance tax rates are 11 percent for up to $1,075,000, and between 13 and 16 percent for inheritances over that sum.

    All other beneficiaries, including any other family members such as nieces, nephews and cousins of the decedent or friends, pay 15 percent on the first $700,000 inherited and 16 percent on any larger amounts.

Inheritance Tax Filing Requirements

  • Tax returns on the transfer of property due to inheritance must be filed within eight months of the New Jersey decedent's death. Such inheritance taxes must also be filed within the same time period for a nonstate resident decedent for property transferred within New Jersey. Such property includes motor vehicles, real estate, boats, jewelry, art, and other tangible property. The beneficiaries of nonresident decedents do not have to pay tax on intangible personal property, including stocks and bonds, no matter where it is located.

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