New Jersey Estate and NJ Inheritance Taxes

New Jersey Estate and NJ Inheritance Taxes

New Jersey Estate Tax vs. NJ Inheritance Taxes:
New Jersey Rules (and How DE, PA & NY Compare)

Estate planning often gets derailed by a simple misunderstanding: the difference between New Jersey estate taxes and NJ inheritance taxes.
We clarify how each tax works, how they’re applied, and what that means for families in New Jersey.

We then compare NJ Inheritances taxes (and estate taxes) to the nearby states Delaware, Pennsylvania and New York.

We break down the current federal estate tax framework, including the 2026 exemption levels and portability rules.
We then walk through New Jersey’s inheritance tax structure by beneficiary class.

We also compare key differences across Delaware, Pennsylvania, and New York — highlighting how location, beneficiary relationships, and estate size can influence outcomes.

This is a high-level educational discussion designed to provide context.
This is not legal or tax advice, and this should not be considered individualized advice.

As laws evolve and personal circumstances vary, coordination with estate planning and financial professionals remains an important step in maintaining an up-to-date estate plan.

Some of the take-aways:

• Estate tax is paid by the estate; inheritance tax is tied to the beneficiary
• New Jersey has no estate tax, but inheritance tax still applies
• Beneficiary classification significantly affects New Jersey tax exposure
• State rules vary widely—Delaware, Pennsylvania, and New York differ materially
• Federal estate tax exemptions increased in 2026, with portability considerations

New Jersey Estate and NJ Inheritance Taxes – Links

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Link to State of New Jersey Inheritance and Estate Tax

New Jersey Estate and NJ Inheritance Taxes – Transcript

Estate planning conversations often get tangled up.

(Often) because people confuse the two different taxes, estate taxes with inheritance taxes.

They sound the same, but they work very differently.

Today we want to untangle that. And give you a clear picture of where New Jersey stands.

And then compare that to what happens in Delaware, in Pennsylvania and New York.

This is very high level stuff.

It’s not going to be legal advice. Or any kind of guidance for your particular situation.

Every family has a different situation.

But as we mentioned before, in the income tax video, which I’ll link to up here……

understanding the framework, how this works, is an important first step.

An estate tax is paid by the estate itself.

In general, the estate tax is based on the total value of everything the deceased person owned.

Now, there are some exceptions.

Things do get excluded from the calculations for estate tax.

I’m simplifying this.

But think of it as the estate writing a check to the federal government….. or the state government …….or both, before assets get distributed.

Now, an inheritance tax is technically imposed on the beneficiary, the person who is receiving the assets.

However, in practice, many times the estate’s executor or the administrator will withhold that tax and take care of that — before the inheritance gets distributed to them.

In many cases, the beneficiary, the person who’s inheriting the assets simply receives a “net” amount after taxes have already been paid.

They don’t need to write a check, a separate check for, um, an inheritance tax to the state.

Some states have an estate tax AND an inheritance tax.

Some states have JUST an estate tax estate.

Some states have JUST an inheritance tax.

That’s essential to know, when it comes to planning your estate.

I’ll also want to mention here – at this point –

that there is no federal inheritance tax.

There’s only….. the federal government only imposes an estate tax.

And that’s only on very large estates.

Let’s talk for a brief moment about the federal estate tax.

Under the one Big Beautiful Bill Act, signed in 2025 and became effective this year, January 1, 2026…….

the federal estate tax exemption is now $15 million, per person.

Got a lot of room there!

And for married couples, that’s now $30 million.

You should know that the federal estate tax rate beyond those amounts…. forty percent.

40%.

That’s steep.

But one other feature that was put into effect is a term called “portability.”

Meaning if the first person, in a married situation, if the first person doesn’t use their full $15 million exemption, the remainder rolls over to the surviving spouse.

Portability is a term you’re going to hear again later in this video.

Here in New Jersey, the estate tax was repealed January 1st, 2018.

So, no estate taxes here in New Jersey, but NJ inheritance taxes remains.

The inheritance tax here in New Jersey is one of only five states that still has an inheritance tax.

The other four states are Kentucky, Maryland, Nebraska……. and Pennsylvania.

All these states, including New Jersey, still have inheritance taxes.

So the inheritance tax here in New Jersey, the NJ inheritance taxes, are based entirely on the relationship between the person who died, and the beneficiary, the person who is receiving or inheriting the assets.

And they break them down in New Jersey into different classes.

A “class A” beneficiary is fully exempt.

There is no inheritance tax.

So who’s included in a as a class A beneficiary?

Well, that would be a spouse, a domestic partner, civil union partner.

It would include parents.

It would include grandparents.

It would include direct descendants like children and grandchildren, including stepchildren.

In 1963, the State of New Jersey eliminated the Class B inheritance tax (class).

So we’re going to skip right ahead to Class C.

What’s a “Class C” beneficiary?

These are folks where there’s going to be some inheritance tax — depending on the assets that get transferred…… or the amount of the assets.

So in a class as a Class C beneficiary, who’s that?

These include the deceased person’s siblings, their brothers and sisters.

It includes the spouses of the deceased person’s children.

In these cases, the first $25,000 is exempt.

And then after that it’s (taxed at) an 11% rate.

That applies up to $1.1 million.

And then beyond 1.1 million…… then the rates go to 13%, then 14%, and they top out at 16%.

But what about “Class D” beneficiaries?

Now, class D includes practically everyone else.

Class D is everyone that’s not Class A, not Class C.

So we’re talking about nieces, nephews, cousins, significant others, friends……

The entire amount is going to be taxable.

The first $700,000 is taxed at 15%.

It’s a big bite.

Everything over $700,000 is taxed at 16%.

So this can really add up, when you start counting up all of these assets,

There is another class, “class E.”

Class E is totally exempt.

What is class E?

Qualified charities.

Religious institutions.

Educational organizations.

And other entities like that.

They’re not going to have any kind of inheritance tax.

So let’s see how New Jersey compares with these three nearby states.

Let’s start with Delaware.

We can call that the “clean” state.

Because they don’t have an estate tax.

They don’t have an inheritance tax. Easy peasy, lemon squeezy.

For families considering moving to – or relocating to – the state of Delaware, the combination of no estate tax, no inheritance tax, there’s no sales tax, and they have relatively low property taxes….

…..make this a compelling move.

If you’re from New Jersey.

And you’re considering a move to Delaware, I think, there, there may be a lot to like.

The biggest downside?

You’re hours away from a real bagel shop.

Let’s talk about Pennsylvania.

Pennsylvania is similar to New Jersey.

There is no state estate tax.

But they do have an inheritance tax in Pennsylvania.

And let’s walk through some of those details.

In Pennsylvania, a surviving spouse is fully exempt…… there is no inheritance tax.

Everything goes directly to a surviving spouse.

If there are direct descendants, children and grandchildren, they will have a 4.5% inheritance tax when the person with the assets passes away.

Siblings of the decedent have an inheritance tax rate of 12%.
It’s not nothing.

All other heirs, people who are receiving some kind of inheritance from an estate…… this includes unmarried partners, nieces, nephews, and friends……. will pay a 15% inheritance tax.

New York is really the outlier in the group.

It imposes a state, a New York State estate tax, but no inheritance tax.

So the New York Estate Tax exemption for 2026 is $7,350,000 per person.

Estates below that amount generally owe no New York estate tax.

But above that amount things get a little complicated.
Because “it’s New York!”

New York’s law contains what some planners call a cliff.

If the value exceeds approximately 105% of the exemption amount, which again ….. let’s make $7,350,000 plus another 5%.

That amount is $7,717,500.

An estate OVER that amount loses the exemption ENTIRELY.

The whole thing becomes taxable, not just the excess.

So between $7,350,000 and the “$7,700-plus amount” — in that little range there, there’s a phased-in amount.

But once you go over $7,717,500 — in New York, the entire thing becomes taxable.

And but wait, there’s more!

Unlike the federal system, in the State of New York’s estate tax system, there is NO portability between spouses!

The estate tax in the state of New York starts at 3.06% and goes up to 16%.

So for New Jersey residents, remember, there is no New Jersey estate tax.

So no state estate tax.

But the inheritance tax is real.

And it can really impact beneficiaries who are not spouses, not children, not grandchildren.

For clients who are thinking about relocating…… or maybe you have family members who live in nearby states…. the rules vary from state to state.

And what really matters is the STATE that the person passed away in —

Not necessarily where the beneficiaries live.

So let me give you an example.

A person passes away in New York state.

There’s no inheritance tax in New York State.

But they have a son or daughter who lives in New Jersey — where there IS an inheritance tax.

What happens there?

It depends on where the person who passed away, where they lived.

They lived in New York state in this example, no inheritance tax.

So the person in New Jersey, no NJ inheritance taxes.

It depends on where the deceased person lived.

(Things like) beneficiary designations, how your assets are titled, gifting strategies over the course of a lifetime can all impact….

what happens with your estate taxes and your inheritance taxes.

These are EXACTLY the kinds of conversations you should be having with your estate planner and with your financial planner — together.

Also, you may have written your, had your will written 10 or 12 years ago.

Things change…… they change all the time.

Um, New Jersey repealed their estate tax in 2018.

That was just seven or eight years ago.

The federal exemption was changed just last year as part of the one big beautiful Bill.

States continue to update their rules all the time.

So, periodic review of your estate plan…… is not really optional.

Thank you for watching New Jersey Estate and NJ Inheritance Taxes