New Jersey inheritance tax rules trip up families after 2025 update

New Jersey’s amended inheritance tax rules took effect Dec. 15, 2025, and estate attorneys say many residents still mistake the state’s separate transfer tax for the repealed estate tax. The changes matter most for families leaving assets to siblings, nieces, nephews, unmarried partners and friends, plus estates using assisted reproduction or navigating new waiver rules.

Why it matters: - New Jersey still taxes some inheritances even though the state estate tax was repealed in 2018. - The inheritance tax is based on who receives the assets, not the total size of the estate. - That means families can face tax exposure even when they are far below the federal estate tax threshold.

What happened: - New Jersey’s amended inheritance tax regulations took full effect on Dec. 15, 2025. - The Division of Taxation readopted N.J.A.C. 18:26 effective Nov. 17, 2025, with amendments that run through Nov. 17, 2032. - Estate planning attorneys say many residents are still using outdated assumptions about what New Jersey can tax at death. - New Jersey is one of only five states that still imposes an inheritance tax, alongside Kentucky, Maryland, Nebraska and Pennsylvania.

The details: - The biggest change expands Class A beneficiaries, who are exempt from the tax, to include non-biological children conceived through any means of assisted reproduction. - Waivers from the Division of Taxation are now required for transfers by all financial institutions, not just banking institutions, trust companies and deposit companies. - The prior 10-business-day waiting period for waiver issuance has been repealed. - No deduction is allowed for an executor’s commission tied to real estate that is specifically devised to a beneficiary. - Spouses, civil union partners, children, stepchildren, grandchildren, parents and grandparents pay no inheritance tax. - Siblings and certain in-laws are generally taxed at 11% to 16% on amounts above a $25,000 exemption. - Nieces, nephews, cousins, friends and unmarried partners are generally taxed at 15% to 16% from essentially the first dollar. - The federal estate tax exemption rises to $15 million per individual and $30 million per married couple for 2026, up from $13.99 million and $27.98 million in 2025. - Recent federal legislation made the higher exemption permanent and indexed for inflation beginning in 2027.

Between the lines: - The federal exemption change helps fewer New Jersey families than many assume, because the state tax turns on beneficiary class rather than estate size. - The assisted reproduction update closes a planning gap for families formed outside traditional biological relationships. - The broader waiver rule signals more administrative friction for estates moving assets through financial institutions.

What’s next: - New Jersey residents with plans to leave assets to siblings, nieces, nephews, unmarried partners or friends should review wills and trusts. - Families formed through assisted reproductive technology should confirm beneficiary language matches the revised rules. - Executors handling estates in New Jersey now need to account for waiver requests from a wider set of financial institutions. - Weiner Law Group LLP says its New Jersey estate planning attorneys work on wills, trusts, powers of attorney and advance directives, and its probate guidance covers estate administration after death.

The bottom line: - The repeal of New Jersey’s estate tax did not eliminate inheritance tax risk, and the 2025 rule changes make that distinction more important for more families.