NJ Division of Taxation - Inheritance and Estate Tax Branch (2024)

FAQs

What is the difference between estate tax and inheritance tax in NJ? ›

INTRODUCTION Transfer Inheritance Tax is a “beneficiary” tax, and is based on who specifically receives a decedent's assets, and how much each beneficiary received. The Estate Tax is based on the size of the entire estate, and does not break down the distribution of assets beyond exemptions for spouses and charities.

The main difference between inheritance and estate taxes is the person who pays the tax. Unlike an inheritance tax, estate taxes are charged against the estate regardless of who inherits the deceased's assets.

By Phone: Call the NJ Inheritance and Estate Tax office at 609-292-5033. Payment vouchers are included with the Inheritance and Estate Tax returns (see charts below). Mail the voucher with your check or money order in the same envelope as the return.

This is based on where the person legally lived when he/she passed away. See Decedent Information for more information on resident and non-resident Inheritance Tax. On January 1, 2018, under current law, the New Jersey Estate Tax will no longer be imposed for individuals who die on or after that date.

In most cases, an inheritance isn't subject to income taxes. The assets a loved one passes on in an investment or bank account aren't considered taxable income, nor is life insurance. However, you could pay income taxes on the assets in pre-tax accounts.

In 2024, the first $13,610,000 of an estate is exempt from the estate tax. A beneficiary may also have to pay capital gains taxes if they sell assets they've inherited, including stocks, real estate or valuables. The federal capital gains tax ranges from 15% to 20%, depending on your tax bracket.

You may be tempted to disclaim or refuse your inheritance in the hopes that the SSA won't find out about it. However, federal law requires you to report any changes in income to the SSA. You have up to 10 days following the end of the month in which the change occurred to report income shifts to the agency.

While the state of New Jersey no longer requires you to pay an estate tax when you die, you still could be subject to a federal tax if your estate is large enough. There could be additional taxes that you'll pay to gift your estate to your heirs as well, such as an inheritance tax.

Currently, the law imposes a graduated inheritance or succession tax ranging from 11% to 16% on the real or personal property with a value of $500.00 or more to certain beneficiaries. All jointly personal and real property is exempt from the probate process.

If there are no claims against the estate within nine months of the death of the deceased, the executor can distribute the assets to beneficiaries and issue a declaration of discharge. So, nine months is essentially the minimum timeline for settling estates valued at over $20,000 in New Jersey.

Who owes NJ inheritance tax? ›

Inheritance taxes are levied on the assets actually received by the beneficiary of the estate. This means that taxes are due based on the amount inherited and are due from the person inheriting the assets.

Specific to the estate tax, the legislation provides that the current $675,000 exemption from state estate tax will be increased to $2 million on January 1, 2017, and on January 1, 2018, the New Jersey estate tax will be completely eliminated.

There is a summary probate procedure in New Jersey if there's no Will, the value is less than $20,000 and a surviving spouse will receive everything.

Beneficiaries of an inheritance in California typically do not have to pay income taxes on the inherited assets. That is because inherited assets are generally not taxable income for individual beneficiaries.

Depending on the relationship between the decedent and the surviving co-owner, the asset will be subject to New Jersey Inheritance Tax at a rate between 11% and 16%. New Jersey provides for classes of beneficiaries, including Class A, Class C, and Class D beneficiaries.

For most survivorship arrangements, you will see that estate taxes are generally applied, meaning that the survivor who gets the portion of the property will have to pay taxes on the value of that portion. This is true for right of survivorship arrangements as well.