As part of a compromised tax bill New Jersey will soon eliminate its state estate tax and increase its tax exemption on retirement income.
Although you would not always know it from press coverage, the federal estate tax is not the most controversial taxation on estates. Many more estates pay state estate taxes than pay federal estate taxes.
Different states have different estate tax rates and exemption limits. Many states have no estate tax at all. Those differences have caused consternation in many state legislatures that have an estate tax as law makers fear that wealthy citizens will retire to other states with no estate tax.
Whether people move primarily because of the estate tax, however, remains a controversy.
Perhaps, nowhere has the estate tax created more recent controversy than in New Jersey. The state generally has high taxes compared to other states and this is true of its estate tax.
It also has many wealthy citizens and a culture of people moving to warmer states to retire, such as Florida which does not have an estate tax.
As a result, New Jersey has decided to eliminate its estate tax entirely as nj.com reports in “7 things you need to know about N.J.’s 23-cent gas tax hike deal.”
The estate tax exemption will be raised in 2017 and the tax will be eliminated completely in 2018. New Jersey will also be decreasing taxes on retirement income. These and other tax changes will be offset by increasing the state’s gas tax considerably.
Reference: nj.com (Oct. 10, 2016) “7 things you need to know about N.J.’s 23-cent gas tax hike deal.”