TRENTON – A bill that would do away with the state’s inheritance tax has been introduced.
The bill, S1996, also would increase the filing threshold for the estate tax.
Sponsored by Sens. Jeff Van Drew, (D-1), Dennis Township, and Steven Oroho, (R-24), Franklin, the legislation would abolish the inheritance tax that was instituted in 1892. According to their proposal, New Jersey is one of only seven states that impose the inheritance tax.
And New Jersey is one of only 17 states that still have some kind of estate tax. And only New Jersey and Maryland impose both taxes, the lawmakers’ bill states.
The legislation would hike the filing threshold from $675,000 to amounts applicable under the federal estate tax. According to the proposal, the basic federal exclusion amount for 2012 would be $5.12 million.
As for the inheritance tax, it was revised in 1985 to exempt from taxation certain transfers, including to spouses. Transfers to nonrelatives, or to siblings, however, are taxed at rates up to 16 percent, the bill states.
According to the proposed fiscal year 2013 budget, the inheritance tax and estate tax combined are the state’s fourth largest major tax source after the income tax, sales tax, and corporate business tax.
In the budget proposed in February, the administration projected $666.9 million for fiscal year 2102 and $713 million for fiscal year 2013 for those two taxes combined.
Under revised revenue projections in May for fiscal year 2012, the administration adjusted the inheritance tax projection upward to $674 million, and the Office of Legislative Services pegged it at $675 million.
Under revised projections for fiscal year 2013 unveiled in May, the administration as well as OLS estimated the inheritance tax at $725 million.
The bill has been referred to the Budget and Appropriations Committee.