New Jersey is one of the last states to still have the loathed inheritance tax. To make matters worse for New Jerseyans, the state has the lowest estate tax exemption limit — $675,000. For years members of various political groups have called for a repeal of the state inheritance and estate tax laws. Will they finally achieve their goal?
A recent plan has been in the works to offer some form of tax cut on the current inheritance and estate tax which is tied to an increase in gas prices. Basically, let’s pay for a tax cut by charging more for gas throughout the state.
Who will the new law affect if it passes?
In the unlikely event that this proposed gas tax-estate tax tie-in plan comes to fruition, it will affect everyone in the state. The current estate tax exemption is $675,000, ridiculously low and still a substantial amount of money for the average American. A tax cut would raise this limit considerably, helping the wealthiest members of the state while hitting the middle and lower-middle class the hardest.
As for the inheritance tax, no tax is imposed on class A beneficiaries (father, mother, grandparent, descendant, spouse, civil union partner, or domestic partner). For beneficiaries who are subjected to the inheritance tax, the current rate is between 11-16%. So basically, if your uncle leaves you an estate, it is subject to an 11-16% tax from the start. If the total value of the estate exceeds $675,000, you also have to pay an estate tax. If the new law passes, the inheritance and estate tax laws will take a cut but the price per gallon for gas will go up as a result.
Considering that fewer than five percent of estates are affected by the estate tax, the plan may not be worth it. Many economists say the numbers don’t add up, especially since the inheritance tax and estate tax combined equal New Jersey’s third largest source of tax revenue.
If you have questions about the N.J. estate tax, or need help probating a will, consult with an experienced attorney as soon as possible. For legal assistance with estate planning matters in Hunterdon and Union Counties, contact Alec Borenstein, Esq., at email@example.com or call 908-236-6457.