NJ is One of Few States To Impose Two “Death Taxes”


By Brenda Flanagan

New Jersey’s a state you really don’t want to be caught dead in.

“It is the worst state to die in, from a tax perspective,” said Susan Barbey

The taxes on her mom’s estate horrified Barbey pushed her to launch a one-woman crusade, to kill New Jersey’s so-called “Death Taxes”.

“New Jersey is behind the times – the estate tax affects a lot of people in the state – not just the wealthy,” said Barbey. 

New Jersey’s one of only a couple states — the other’s Maryland – that imposes two so-called “Death Taxes.” The Estate Tax levies the total value of your assets — including house, cash, and insurance — anything over a $675,000 threshold. Even the feds don’t tax estates until they hit $5.3 million.  

“If somebody owns a house, they have a little 401K plan, some life insurance – a million dollars I’m sure covers a lot of individuals,” said Wolff & Samson Estate Attorney David Schlossberg

The Inheritance Tax takes a slice of assets given after somebody dies —  from 11 percent to 16 percent — depending on how you’re related to the dearly departed. For example, death taxes on a Jersey estate worth $1 million can range from $33,000 for the Spouse and Children, to more than $100,000 ($107,250) for siblings, to a whopping $153,000 for a friend. Most states don’t have any death taxes and that’s pushing residents to make painful decisions.

“My clients and I’m sure a lot of other individuals – they’re thinking, “How do I avoid this?”  You move,” said Schlossberg.

Maryland’s in the process of adjusting or repealing it’s death taxes, which would leave Jersey as the only state with two. Now that could really kill New Jersey’s chances for economic prosperity, according to tax analysts. 

Gov. Christie tells this story about his friends.

“They moved to North Carolina. And I said, Oh, you can’t afford to live here anymore? And the wife said, No, Chris – we can’t afford to die here,” said Christie.

Several legislators support bills that would raise New Jersey’s Estate Tax threshold at least to the $5.3 Million federal level.  Some propose dumping the inheritance tax. But lawmakers are loathe to ditch the $700 million in annual revenue both taxes pull in.

“You have to come up with replacement income, because the ability to cut is almost exhausted. The only place to look in my mind, you have to consider the Millionaire’s Tax,” said Asm. John Burzichelli.

But the Millionaire Tax is a non-starter with Gov. Christie. And as the stalemate continues, politicians fear, Jersey’s affluent and middle class will be dying to move out.

  • Chris

    So its the place you reside when you die, not where the benefactors might live?

  • 4570

    “NJ’s affluent and middle class will be dying to move out.”
    Couple them with NJ’s state sanctioned “good guys” and girls who have passed the rigors of background checks to achieve NJ Firearms ID Cards, who are also feeling the wrath of DEMOCRAT law makers, and you have a state left to “spiders, snakes and scorpions.” Thank you very much: Sen. Weinberg, Sen. Sweeney, Assemblyman Mainor, the Star Ledger and all the rest of you “gun control” enthusiasts.

  • S. Barbey (Bergen County, NJ)

    Extremely wealthy NJ families know about these two taxes (NJ state & inheritance taxes) and they are moving out. It’s the vast majority of NJ residents who don’t know about these two taxes and only learn about them when they settle a NJ decedent’s estate or when they inherit money from a NJ decedent—learning they have to pay an inheritance tax to New Jersey. AND, it is a misconception that the estate tax only affects the very wealthy.

    NJ is only 1 of 16 states that has an estate tax, 1 of 6 states that has an inheritance and is only 1 of only 2 states that has both an inheritance & an estate tax (the other is Maryland).

    The estate tax (historically referred to as a “privilege tax”) is levied against all NJ estates VALUED OVER $675,000. The $675,000 threshold is the lowest in the United States, and is not defined as privileged by today’s standards (inflation). The threshold must be raised to reflect “privilege” status, as the law intended when passed.

    The NJ inheritance tax of 1892 is levied (not against the value of an estate and applied with equal parity — over $675,000) but against WHO is inheriting money. While some family members (spouse, child, grandchild, parent, grandparent,stepchild) are arbitrarily selected not to pay this tax, other family members are arbitrarily selected to pay the inheritance tax (brother, sister, son-in-law, daughter-in-law, niece nephew, aunt, uncle). This by definition is discrimination: the unjust or prejudicial treatment of different categories of people.

    Not only is this true, but family members who have to pay the inheritance tax are virtually taxed at dollar one and up to 16%. For example, if you leave your niece the last $1000 to your name (hardly rich), the first $500 is tax exempt with the rest taxed up to 16%. As this example demonstrates, the inheritance tax is potentially applied to the poorest of the poor. This is class warfare.

    The NJ inheritance must be repealed to end this discriminatory practice in NJ. Interestingly, although the NJ inheritance tax affects only a small minority of NJ decedents and their heirs (where discrimination is always placed–at the feet of the minority) the NJ inheritance tax generates annual revenue of $350,000,000 for NJ, equal to that of the NJ estate tax, a “privilege” tax. This is only made possible because the inheritance tax is levied virtually at dollar one, and potentially on the poorest of the poor.

    The NJ inheritance tax must be repealed. And, the NJ estate tax threshold must be raised to the federal threshold, adjusted annually for inflation. Change must come from the public’s grassroots efforts. You may be planning on retiring and dying elsewhere and won’t bother contacting your state legislators. Problem is, none of us know when we’re going to die. Play it safe and please contact your NJ district representatives today so we the people can get this changed as quickly as possible. Do you want to leave NJ a good chunk of your money?

    If not, go to: njleg.state.nj.us/districts/districtnumbers.asp

    Locate your District by number. Click on your District. The name of your state Senator and two state assemblymen will appear. Click the name of your state Senator, then click on Contact Your Legislator (s). Next, click all three boxes and the click on Select Your Representatives. Subject is: TAXATION. Enter your name. Email Subject is: Pass bill A1281/S1311 Message: This bill repeals NJ inheritance tax & increases NJ estate tax to federal level, adjusted annually for inflation