Inheritance Tax

Inheritance Tax in New Jersey: Complete Guide 2026

Updated 2026-03-12

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Inheritance Tax in New Jersey: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

New Jersey is one of only six states that levy an inheritance tax, and it distinguishes itself by classifying beneficiaries into lettered groups with dramatically different tax treatment. While spouses, children, grandchildren, and parents are completely exempt (Class A), siblings, sons-in-law, and daughters-in-law face rates up to approximately ~16%, and more distant beneficiaries pay even steeper rates. New Jersey previously imposed both an inheritance tax and an estate tax, but the state estate tax was repealed effective January 1, 2018, leaving the inheritance tax as the sole state death tax.

New Jersey Inheritance Tax Rates (2026)

Beneficiary ClassIncludesTax Rate
Class ASpouse, children, grandchildren, parents, grandparents~0% (exempt)
Class CSiblings, sons/daughters-in-law~11% to ~16% (first ~$25,000 exempt)
Class DAll others (nieces, nephews, friends, cousins, etc.)~15% to ~16% (no exemption)
Class ECharities and government entities~0% (exempt)

Class C Rate Schedule

Taxable AmountRate
First ~$25,000~0% (exempt)
~$25,001 to ~$1,100,000~11%
~$1,100,001 to ~$1,400,000~13%
~$1,400,001 to ~$1,700,000~14%
Over ~$1,700,000~16%

Class D Rate Schedule

Taxable AmountRate
First ~$700,000~15%
Over ~$700,000~16%

How New Jersey Inheritance Tax Works

Beneficiary Classification

The key to New Jersey’s inheritance tax is the classification of each beneficiary. Class A beneficiaries (spouse, lineal descendants, lineal ancestors) are fully exempt, meaning transfers to these individuals are never subject to inheritance tax regardless of size. Class C beneficiaries (siblings and in-laws) receive a ~$25,000 exemption before graduated rates apply. Class D beneficiaries (everyone else) receive no exemption and pay rates starting at approximately ~15%.

This classification system means the same estate can generate very different tax outcomes depending on who inherits. A ~$500,000 bequest to a child generates ~$0 in inheritance tax, while the same amount to a sibling generates approximately ~$52,250, and the same amount to a friend generates approximately ~$75,000.

What Property Is Taxable

All property passing from a New Jersey resident at death is subject to inheritance tax, including real estate, bank accounts, securities, business interests, retirement accounts, and jointly owned property. For non-residents, only real estate and tangible personal property physically located in New Jersey is taxable.

Life insurance proceeds are generally exempt from New Jersey inheritance tax when paid to a named beneficiary. However, proceeds payable to the estate are not exempt.

Transfers in Contemplation of Death

Transfers made within ~3 years of death may be considered gifts in contemplation of death and are subject to inheritance tax. However, transfers to Class A beneficiaries remain exempt regardless of timing.

Filing and Payment

The New Jersey inheritance tax return (Form IT-R for resident decedents) is due within ~8 months of the date of death. The tax must be paid before the Register of Wills will issue a tax waiver (Form L-8 or L-9) necessary to transfer assets. Interest accrues at approximately ~10% per year on unpaid taxes.

Comparison to Other Inheritance Tax States

StateLineal Exempt?Sibling RateOther RateFiling Threshold
New JerseyYes (Class A)~11%—~16%~15%—~16%~$0 (all estates)
PennsylvaniaNo (~4.5%)~12%~15%~$0 (all estates)
MarylandYes~10%~10%~$0 (all estates)
KentuckyYes (Class A)~4%—~16%~6%—~16%~$500 to ~$1,000

New Jersey’s inheritance tax rates for non-lineal beneficiaries are among the highest in the country, but the full exemption for children and grandchildren is more favorable than Pennsylvania’s ~4.5% rate on lineal descendants.

Tips for Minimizing New Jersey Inheritance Tax

  1. Leave assets to Class A beneficiaries when possible. Transfers to spouses, children, and grandchildren are fully exempt, making intergenerational transfers the most tax-efficient.
  2. Use the ~$25,000 Class C exemption strategically. Siblings and in-laws receive a ~$25,000 exemption. Consider whether dividing bequests among multiple Class C beneficiaries maximizes exemptions.
  3. Gift assets during lifetime. Gifts made more than ~3 years before death avoid the “contemplation of death” rule, though federal gift tax rules still apply.
  4. Name beneficiaries on life insurance policies. Life insurance paid to named beneficiaries (not the estate) is exempt from inheritance tax.
  5. Use irrevocable trusts. Assets placed in irrevocable trusts more than ~3 years before death may be excluded from the taxable estate.
  6. Consider charitable bequests. Class E beneficiaries (charities) are fully exempt, and charitable bequests reduce the taxable estate.
  7. File and pay promptly. New Jersey charges approximately ~10% interest on late payments, making timely filing especially important.

Key Takeaways

  • New Jersey’s inheritance tax exempts Class A beneficiaries (spouse, children, grandchildren, parents) entirely, with no cap on the exemption
  • Class C beneficiaries (siblings, in-laws) face rates from approximately ~11% to ~16% after a ~$25,000 exemption
  • Class D beneficiaries (friends, cousins, other non-relatives) pay approximately ~15% to ~16% with no exemption
  • New Jersey repealed its state estate tax in 2018, but the inheritance tax remains in full effect
  • Life insurance proceeds paid to named beneficiaries are generally exempt
  • Interest on unpaid inheritance tax accrues at approximately ~10% per year

Next Steps