No More Estate In New Jersey

No more estate tax for New Jersey residents.  New Jersey will no longer impose an Estate Tax for individuals who die on or after January 1, 2018. 

However, the Inheritance tax will remain in place.

What is the estate tax? An estate includes cash and securities, real estate, insurance, trusts, annuities, business interests and other assets you own at the time of death.   The government taxes your right to give at least some of your property to others after your death. 

What is the Inheritance tax?  Inheritance taxes are paid by the person inheriting the money or assets.

Most states that have an estate or inheritance tax only have one.  But, New Jersey had both taxes in place.  Residents were only required to pay one of them. 

For deaths prior to January 1, 2018 the inheritance tax rates in New Jersey range from 11 percent to 16 percent. The tax doesn't apply to money left to a grandparent, parent, spouse or child. It applies to transfers of $25,000 or more to the decedents' siblings or their children's spouses, or transfers of $500 or more to other relatives or friends.

The removal of the estate tax is important to entrepreneurs who want to pass on their businesses to their siblings.  In the past doing so meant that their siblings were saddled with paying high taxes.  Quite often they had to sell the inherited business in order to pay the taxes. 

At the federal level the 2017 Tax Cuts and Jobs Act raised the estate tax exemption to $5,400,000.  A 40% tax is imposed on any amount about that.

As of 2017 these states do not have an estate tax:

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Florida

Georgia

Idaho

Indiana

Iowa

Kansas

Kentucky

Louisiana

Michigan

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Mexico

North Carolina

North Dakota

Ohio

Oklahoma

Pennsylvania

South Carolina

South Dakota

Tennessee

Texas

Utah

Virginia

West Virginia

Wisconsin

Wyoming

Sources:
New Jersey Estate Tax Homepage
New Jersey Tax Guide
IRS Estate Tax homepage
Tax Cut and Jobs Act

By Wendy Stewart