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Bill > S3878


NJ S3878

NJ S3878
Eliminates transfer inheritance tax for step-grandchildren.


summary

Introduced
11/18/2024
In Committee
11/18/2024
Crossed Over
Passed
Dead

Introduced Session

2024-2025 Regular Session

Bill Summary

This bill eliminates the State's transfer inheritance tax for the step-grandchildren of a decedent by treating step-grandchildren the same as a decedent's stepchildren and grandchildren under the New Jersey Transfer Inheritance Tax Act, R.S.54:33-1 et seq. Currently, step-grandchildren are treated as Class D beneficiaries under subsection d. of R.S.54:34-2 because they do not fall within any of the other statutory classes of beneficiaries (Classes A and C; subsections a. and c.) set forth in that section of law. As Class D beneficiaries, step-grandchildren of a decedent are subject to a transfer inheritance tax of: 15 percent on any property transfer of an amount up to $700,000; and 16 percent on any property transfer in excess of that amount. By contrast, the grandchildren of a decedent, being the "issue of any child or legally adopted child of a decedent," are classified as Class A beneficiaries under subsection a. of R.S.54:34-2, and thus are not subject to any transfer inheritance tax pursuant to the provisions of that section of law. Transfers to stepchildren are likewise treated as Class A beneficiaries and exempt from any transfer inheritance tax under R.S.54:34-2.1. Under the bill, step-grandchildren, i.e., the issue of any stepchild of a decedent, would be treated like stepchildren and grandchildren with respect to a decedent's property transfer, and thus be considered Class A beneficiaries subject to no taxation.

AI Summary

This bill eliminates the transfer inheritance tax for step-grandchildren in New Jersey by amending the existing Transfer Inheritance Tax Act. Currently, step-grandchildren are classified as Class D beneficiaries and subject to high tax rates (15-16% depending on the property value), whereas direct grandchildren and stepchildren are exempt from such taxes. The bill modifies the law to treat step-grandchildren the same as stepchildren and direct grandchildren, effectively categorizing them as Class A beneficiaries who are not required to pay transfer inheritance tax. Specifically, the legislation changes the language of R.S.54:34-2.1 to include "the issue of any stepchild of a decedent" alongside existing provisions about stepchildren, which means step-grandchildren will now receive the same tax treatment as biological or adopted grandchildren. The bill will take effect on January 1, 2025, and applies to the estates of all decedents, though it does not provide refunds for taxes already paid prior to its implementation.

Committee Categories

Government Affairs

Sponsors (3)

Last Action

Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee (on 11/18/2024)

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