New Jersey is one of those rare states that collects not just one, but two death taxes. First, New Jersey residents are subject to a death tax on their estate if the value exceeds a measly $675,000 – this is called the New Jersey estate tax. Second, certain relatives and all non-relatives who inherit from a New Jersey resident (including brothers, sisters, nieces, nephews, and friends) are subject to a death tax on the amount they inherit – this is called the New Jersey inheritance tax.
Both Indiana and North Carolina repealed their state death taxes in 2013. In addition, multiple states have tweaked their state death tax laws over the past few years to make them, well, for lack of a better phrase, less taxing – this includes Maryland, Minnesota, New York, Rhode Island, Tennessee (where the state death tax will go away for good in 2016) and Washington. With all of these recent favorable state death tax moves, it should come as no surprise that New Jersey lawmakers are considering changes to their state’s death tax laws since New Jersey not only collects two death taxes, but also has the lowest estate tax exemption by nearly $250,000 (the state exemptions currently range from $921,655 in Rhode Island – which will increase to $1.5 million beginning in 2015 – to $5.34 million in Delaware and Hawaii).
While Governor Chris Christie supports raising the estate tax exemption to $1 million, some lawmakers would go as far as to completely repeal both death taxes, while others would raise the estate tax exemption to match the federal exemption (which is currently $5.34 million; this is the route that both Maryland and New York have taken). According to Ashlea Ebling of Forbes, there are currently 21 bills that have been introduced to make changes to New Jersey’s estate tax, inheritance tax, or both. Nonetheless, with New Jersey’s well-publicized budgetary problems and death taxes bringing in $700 million in revenues annually, it appears that the death tax debate is raging at the wrong time.
So will lawmakers be able to make death less taxing in New Jersey? I predict that at the very least the estate tax exemption will be increased to $1 million, but the inheritance tax will remain untouched. Stay tuned to see if I’m right.
- What’s the Difference Between an Estate Tax and an Inheritance Tax?
- Overview of New Jersey Inheritance Tax Laws
- Overview of New Jersey Estate Tax Laws
- 2014 State Death Tax Exemption and Top Rate Chart
Photo: John Francis Bongiovi, Jr., known publicly as Jon Bon Jovi, a New Jersey native