Did you know that the New Jersey estate tax has been repealed?
The regulation was passed in the transportation bill in late 2016. Effective Jan. 1, 2018, the estate tax repeal goes into effect, so there will no longer be New Jersey estate tax. For deaths as of Jan. 1, 2017, the NJ estate tax exemption increased from $675,000 to $2 million. That means an individual can leave $2 million to heirs without state estate tax. Money left to spouses is always exempt.
But there’s a big catch for many New Jersey residents. New Jersey imposes two death taxes — the estate tax and the inheritance tax.
The inheritance tax is still in effect. New Jersey’s inheritance tax is imposed on siblings, nieces and nephews and others – not spouses or children – and the exemption is a mere $500.
State estate and inheritance taxes are separate from the federal estate tax, which has a generous $5.45 million exemption (with proper planning, a couple can shield $10.9 million from estate tax, using current regulations – the GOP House bill eliminates estate tax).
What should you do? Make an appointment with your CPA or tax attorney to help plan or advise.