In a joint appearance on September 30, 2016, Governor Chris Christie and legislative leaders announced a bipartisan agreement to repeal the New Jersey Estate Tax.
The repeal is part of the tax package increasing the gasoline tax and dedicating those revenues to transportation infrastructure following the recent Hoboken train accident.
New Jersey is currently one of 19 states that imposes an estate tax. As other states have moved to increase their estate tax exemption, New Jersey has kept the exemption at $675,000, the lowest in the country.
Under the proposal, the exemption is to increase to $2,000,000 for the year 2017, and the estate tax is to be repealed beginning in 2018.
Read the press release here. View the video and transcript here.
Upon enactment of the proposal, New Jersey will compare favorably to states such as Florida, Texas and California for estate tax planning purposes. In the northeast, states retaining an estate tax include New York, Connecticut, Massachusetts, Vermont, Maine, Maryland and Delaware. Pennsylvania continues to impose an inheritance tax.
The estate tax savings will be significant. Currently, the New Jersey estate tax on a $1,000,000 estate is $33,200, on a $2,000,000 estate is $99,600, and on a $5,000,000 estate is $391,000. For estates that exceed the Federal estate tax exemption of $5,450,000 (increasing to $5,490,000 in 2017), the combined top rate of estate tax will drop from 49.6% to 40%, a savings of 9.6%.
The New Jersey inheritance tax is not mentioned in the announcement, and presumably will remain in effect. However, since the reforms of Governor Kean in 1985, that tax has been limited to transfers to persons other than a spouse, descendant or ancestor.
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
