I’m a ‘Class C’ beneficiary. Will I have to pay inheritance tax?

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Q. Is the $25,000 inheritance tax exclusion for each beneficiary or for all those in Class C?
— Heir

A. Let’s go over how the New Jersey inheritance tax works.

The tax is based on the relationship of the beneficiary to the decedent.

Class A beneficiaries are excluded from the inheritance tax. These include a parent, grandparent, spouse, child of a decedent and others.

Class C beneficiaries — the type you’re asking about — include a brother or sister of a decedent, a spouse or surviving spouse of a child of a decedent and a civil union partner, said Kenneth Bagner, a certified public accountant with Sobel and Co. in Livingston.

He said each beneficiary is responsible for whatever taxes are owed, depending on the amount of the inheritance.

The first $25,000 inherited is tax-free, Bagner said.

The next 1.075 million is taxed at 11%, the next $300,000 is taxed at 13%, the next $300,000 after that is taxed at $14% and anything over $1.7 million is taxed at 16%, Bagner said.

Note that Class D beneficiaries are anyone not included in Classes A, C, or E, including nieces and nephews, and Class E includes qualified charities, religious institutions, educational and medical institutions, non-profit benevolent or scientific institutions, the State of New Jersey or any of its political subdivisions.

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This story was originally published on Dec. 26, 2022.

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