New Jersey has an inheritance tax which is in addition to the Federal estate tax, New Jersey estate tax, and income taxes.
Whether an inheritance tax is owed depends on the relationship of the beneficiary of the estate to the decedent and the amount of the inheritance.
The inheritance tax can apply to both probate and non-probate assets (i.e.; retirement accounts, jointly held assets, and payable on death accounts).
Even if no inheritance taxes are owed, the executor or administrator of the estate may still have to file the NJ inheritance tax form to prove that no inheritance taxes are owed.
The inheritance tax must be paid in full within eight (8) months from the date of death of the decedent to avoid additional interest for unpaid taxes.
Table: NJ Inheritance Tax Rates
Civil union partner - after 02/19/2007
Domestic partner - after 07/10/2004
Child (natural and adopted)
Mutually acknowledged child
The offspring of a natural parent conceived by the artificial insemination of that parent who is a partner in a civil union couple is presumed to be the child of the non-natural partner. See In the Matter of the Parentage of the Child of Kimberly Robinson, 383 N.J. Super. 165; 890 A.2d 1036 (Ch. Div. 2005).
Issue of a child or a legally adopted child (i.e.; grandchildren, great-grandchildren, etc.)
The issue of stepchildren are Class D beneficiaries, not Class A beneficiaries.
Exempt from NJ Inheritance Taxes for decedents dying on or after July 1, 1988.
The Form NJ-IT-R must be filed with sufficient evidence to prove the mutually acknowledged child relationship, even though no tax will be owed.
Eliminated by statute as of July 1, 1963.
Siblings (including half brother and half sister)
Spouse or surviving spouse of a child of the decedent (i.e.; son-in-law or daughter-in-law)
Civil union partner or surviving civil union partner of a child of the decedent (i.e.; son-in-law or daughter-in-law) - after 02/19/2007
For decedents dying on or after July 1, 1988:
First $25,000, no tax.
Next $1,075,000, 11% tax.
Next $300,000, 13% tax.
Next $300,000, 14% tax.
Over $1,700,000, 16% tax on amount over $1,700,000.
Every other transferee, distributee or beneficiary who is not included in Classes A, C or E.
Examples of Class D beneficiaries include:
Siblings of the decedent's spouse/civil union partner/domestic partner (i.e.; stepbrothers and stepsisters)
Spouses/civil union partners/domestic partners of stepchildren
Spouses/civil union partners/domestic partners of mutually acknowledged children
Fiancé or fiancée
Uncles and aunts
Nieces and nephews
For decedent's dying on or after 03/29/1962:
If less than $500, no tax. If $500 or more, no exemption.
Up to $700,000, 15% tax.
Over $700,000, 16% tax on amount over $700,000.
The State of New Jersey or any political subdivision
thereof, or any educational institution, church, hospital, orphan
asylum, public library or Bible and tract society or to, for the use of
or in trust for religious, charitable, benevolent, scientific, literary or
educational purposes, including any institution instructing the blind
in the use of dogs as guides, no part of the net earnings of which
inures to the benefit of any private stockholder or other individual
or corporation; provided, that the exemption does not extend to
transfers of property to such educational institutions and
organizations of other states, the District of Columbia, territories
and foreign countries which do not grant an equal, and like
exemption on transfers of property for the benefit of such
institutions and organizations of this State.
The fact that a beneficiary may be considered "nonprofit" by
the Internal Revenue Service does not necessarily mean that it
qualifies for exemption as a Class E beneficiary since the criteria
Exempt from NJ Inheritance Taxes.
The information in this article was obtained from New Jersey laws and regulations and the NJ Division of Taxation website.
Information in this article is subject to change at any time by the State of New Jersey.