Understanding New Jersey Inheritance Tax
New Jersey imposes an inheritance tax on the transfer of assets from a deceased individual to their beneficiaries. Unlike the federal estate tax, which applies based on the total value of the estate, the New Jersey inheritance tax focuses on the relationship between the deceased and the beneficiary.

Applicability of the Tax
The New Jersey inheritance tax applies to transfers of property made at death to certain beneficiaries, depending on their relationship to the deceased. Beneficiaries are classified into different groups, each subject to different tax rates or exemptions. For example, transfers to spouses, civil union partners, children, grandchildren, and parents (all considered Class “A” Beneficiaries) are exempt from inheritance tax, while transfers to siblings, nieces, nephews, and other beneficiaries may be subject to tax (all considered Class “C” and “D” Beneficiaries).

Tax Rates and Exemptions
The tax rates for New Jersey inheritance tax vary depending on the beneficiary's relationship to the deceased and the value of the assets transferred. Beneficiaries who are not exempt may face tax rates ranging from 11% to 16%, with a maximum rate applying to beneficiaries outside of the immediate family. However, certain exemptions and deductions may apply, such as the transfer of certain types of property or assets below a certain threshold.

Filing and Payment Requirements
Executors or administrators of estates are responsible for filing the New Jersey inheritance tax return and paying any applicable taxes. The return must be filed within eight months of the decedent's death, although extensions may be available under certain circumstances. Failure to comply with filing and payment requirements may result in penalties and interest charges.