26 Nov What tax is owed on an IRA I inherited from my mom?

Q. My mother passed away a few months ago and named me as 50% beneficiary on her IRA (that she inherited from my dad). What is the New Jersey state and federal tax rates that need to apply for distributions? I understand the account needs to be drawn down in 10 years, however I will be taking a majority distribution this year. She lived in North Carolina and I am in New Jersey.
— Beneficiary

A. Our condolences on your mother’s passing.

The answer depends on a few issues.

You are correct that the IRA rules require it to be paid within 10 years, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

Unless the monies were in a Roth IRA, which has completely different rules, the withdrawals are subject to tax as ordinary income, he said.

There is no set rate as there is with capital gains, he said.

“The IRA distribution is added to the rest of your income and taxed accordingly,” he said. “There are seven marginal tax brackets and the tax will be dependent upon which marginal tax bracket applies.”

The same is true for New Jersey.

“However, New Jersey also has a Retirement Exclusion, which may apply depending on your age and other income,” he said, recommending you speak with a tax professional to determine how much, if any, tax should be withheld at time of withdrawal.

“As an aside, although your mother lived in North Carolina, the distributions that you take will not be subject to North Carolina tax,” Karu said.

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This story was originally published in November 2025.

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