NEW JERSEY ESTATE PLANNING
New Jersey Inheritance Tax: What Families Should Know
New Jersey still has an inheritance tax, and whether it applies depends largely on who inherits the assets. Although New Jersey no longer imposes an estate tax for deaths on or after January 1, 2018, transfers to some beneficiaries can still be subject to inheritance tax.
Current rules | Sources verified October 1, 2026
AT A GLANCE
The relationship matters. Transfers to a spouse or child are generally exempt, while siblings, nieces, nephews and friends can receive different tax treatment.
Tax liability, filing requirements and the paperwork needed to release an asset are separate questions. Review all three with the estate’s attorney and tax professional.
Does New Jersey still have an inheritance tax?
Yes. Inheritance tax looks at transfers to beneficiaries and their relationship to the person who died. Estate tax is a different tax, based on the estate as a whole. Ending New Jersey’s estate tax did not repeal its inheritance tax.
The deceased person’s legal residence and the type and location of property also matter. New Jersey residents can have a broad range of assets subject to review. Certain New Jersey property owned by someone who lived elsewhere can trigger nonresident inheritance-tax rules. Where the beneficiary lives is not the deciding factor.
Which beneficiaries are exempt from New Jersey inheritance tax?
New Jersey groups beneficiaries into classes. The following is a practical overview; special family relationships and organization eligibility need individual review.
| Class | Common beneficiaries | General treatment |
|---|---|---|
| A | Spouse, qualifying civil union or domestic partner, parents, grandparents, children including legally adopted children, stepchildren, and descendants such as grandchildren | Exempt |
| C | Brothers and sisters; a child’s spouse or surviving spouse, or qualifying civil union partner or surviving civil union partner | First $25,000 exempt; graduated tax above that amount |
| D | Beneficiaries outside Classes A, C and E, including nieces, nephews and friends | Generally taxable, subject to applicable exceptions |
| E | Qualified charities and other eligible exempt organizations | Exempt |
A stepchild is listed in Class A, but a step-grandchild is not included in that category. A domestic partner must meet the applicable legal requirements; sharing a home alone does not establish an inheritance-tax exemption.
Sources: NJ beneficiary classes and NJ definitions.
How much inheritance tax can siblings and other beneficiaries owe?
For Class C beneficiaries, the tax is graduated. Each rate applies to its portion of the transfer, rather than one rate applying to the entire amount.
| Class C transfer portion, per beneficiary | Rate |
|---|---|
| First $25,000 | Exempt |
| Next $1,075,000 | 11% |
| Next $300,000 | 13% |
| Next $300,000 | 14% |
| Amount above $1,700,000 | 16% |
Class D transfers are taxed at 15% on the first $700,000 and 16% above that amount. Transfers with an aggregate value below $500 to a beneficiary are exempt; that rule is not a general $500 deduction from a larger taxable inheritance.
As a simplified illustration, a $100,000 taxable cash transfer to a sibling would produce $8,250 of inheritance tax after the $25,000 Class C exemption. The same taxable amount passing to a niece, nephew or friend in Class D would produce $15,000. These illustrations assume no other adjustments or exemptions.
Sources: NJ inheritance tax rates and NJ general inheritance-tax information.
Do joint accounts and beneficiary designations avoid inheritance tax?
Do not assume that an asset is exempt simply because it has a named beneficiary or a surviving joint owner. The state’s resident return includes joint financial accounts and certain payments made directly to beneficiaries.
For a joint account, ownership and contributions can affect the amount reported. Retirement plans, annuities and other contracts also require review of the specific asset and recipient.
Life insurance proceeds paid to a named beneficiary have a specific inheritance-tax exemption. That exception does not make every beneficiary-designated account exempt, and life insurance payable to the estate is treated differently.
Sources: NJ resident inheritance-tax return, financial accounts and transfer schedules and NJ inheritance-tax exemptions.
Is inheritance tax the same as income tax on inherited assets?
No. Being exempt from New Jersey inheritance tax does not settle every tax question associated with inherited property.
For federal income-tax purposes, receiving inherited property generally does not itself create taxable income. Income that the property later produces, such as interest, dividends or rent, can be taxable. Distributions from an inherited traditional IRA may also be taxable.
Federal estate-tax rules remain separate from New Jersey’s rules. The applicable date of death, account type and beneficiary circumstances determine which issues need review. This guide does not calculate federal estate tax or inherited-account distribution requirements.
Source: IRS Publication 559, Survivors, Executors, and Administrators.
When must an inheritance-tax return be filed and paid?
When a New Jersey inheritance-tax return is required, it generally must be filed within eight months after the date of death. Tax due must also be paid within that period.
An extension to file does not extend the time to pay. New Jersey charges 10% annual interest on unpaid inheritance tax after the eight-month deadline.
A tax exemption does not automatically resolve the filing question. The estate representative and professional advisors need to check the beneficiaries, assets and any forms required to release property. New Jersey provides different return and waiver procedures for resident and nonresident estates.
Why might a tax waiver be needed when no inheritance tax is due?
A waiver is consent to release or transfer certain assets. It is not the same as a beneficiary’s tax exemption. New Jersey real estate and certain financial assets can require waiver paperwork even when no tax is owed.
The Division of Taxation issues Form 0-1 when required. Eligible Class A transfers of certain financial assets may use the self-executing Form L-8 instead. Form L-8 cannot be used to transfer real estate.
Ask the estate’s attorney and the institution holding the asset which process applies. Account ownership, the beneficiary and the type of property can change the required paperwork.
Sources: NJ tax waiver requirements and NJ filing and waiver procedures.
How can families include inheritance tax in their planning?
Start with the people and organizations you intend to benefit, then review how each asset would reach them. A beneficiary list that includes siblings, nieces, nephews, friends or a blended family deserves particular attention.
- Which beneficiary class applies to each intended recipient?
- Do my account designations and estate documents reflect my current wishes?
- Would ownership arrangements or a trust change how the transfer is reviewed?
- Who will handle tax filings, waiver requests and the funds needed for any tax?
At Retirement Refined, we help connect beneficiary and estate-planning discussions with your broader retirement plan and coordinate with your estate attorney and tax professional. Your attorney handles legal documents and legal advice; your qualified tax professional addresses your specific tax circumstances.
Specific individualized tax advice not provided. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This information is not intended to be a substitute for specific individualized tax or legal advice.
LPL Financial representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
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ABOUT THE AUTHOR
Paul Levin, CFP®, ChFC®, RICP®*, TPCP®
Managing Principal, Retirement Refined
Paul Levin, CFP®, ChFC®, RICP®, TPCP® is the Managing Principal of Retirement Refined, a financial planning and wealth management firm based in Cherry Hill, New Jersey. With more than three decades of experience, Paul works with individuals, families, and business owners on retirement planning, retirement income, investment management, and related financial decisions.
*RICP® conferred by The American College.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a Registered Investment Advisor.
Sources verified October 1, 2026. Inheritance-tax rules depend on the date of death and the facts of the transfer. This guide describes current New Jersey rules; historical deaths can require different estate-tax review. Laws and procedures can change.
