For anyone managing their assets in the Garden State, understanding the estate tax in New Jersey is essential. And here’s the big news: New Jersey doesn’t currently have one. The state repealed its estate tax in 2018, joining a growing list of states that have eliminated this levy entirely.
New Jersey once had one of the most burdensome estate tax systems in the country. The state imposed estate taxes on estates worth just $675,000 or more—one of the lowest exemption thresholds in the U.S. But in 2016, lawmakers passed a tax reform package that phased out the estate tax. It was completely repealed starting January 1, 2018.
This change was part of a broader effort to make the state more financially appealing to retirees and high-net-worth individuals, many of whom were leaving for states with more favorable tax laws.
Does That Mean Inheritances Are Tax-Free?
Not quite. While there’s no estate tax in New Jersey, the state still imposes an inheritance tax. This tax applies to beneficiaries based on their relationship to the person who has passed.
Here’s how it breaks down:
Transfers to spouses, parents, children, grandchildren, and charities are exempt.
Transfers to siblings, in-laws, cousins, or unrelated individuals may owe taxes at rates ranging from 11% to 16%.
So, while your estate won’t owe taxes at the state level, your beneficiaries might still owe inheritance tax depending on who they are.
Meanwhile, the federal estate tax still applies to very large estates—those valued at more than $13.61 million in 2024. Most people fall well below that threshold, but it’s worth knowing in case your estate grows in value over time.
Planning Without the Estate Tax in New Jersey
No estate tax in New Jersey means more flexibility for many families. It also creates opportunities to transfer assets more efficiently—especially with tools like revocable trusts or lifetime gifts. However, it’s still important to consider how inheritance tax or federal estate tax could impact your plan.
The repeal of the estate tax in New Jersey is a win for many families. But thoughtful planning is still essential to avoid unnecessary taxes and ensure everything goes where you want it to.
(Read More: Learn about revocable trusts in New Jersey versus Nevada.)
