This bill amends the New Jersey Transfer Inheritance Tax Act to eliminate the transfer inheritance tax for step-grandchildren of a decedent. Specifically, it reclassifies step-grandchildren, treating them the same as stepchildren and grandchildren, who are currently classified as Class A beneficiaries and exempt from the transfer inheritance tax. The new legal language inserted into R.S.54:34-2.1 states that the transfer of property to a stepchild or the issue of any stepchild shall be taxed at the same rates and with the same exemptions as property transfers to a child born in lawful wedlock.

Currently, step-grandchildren are classified as Class D beneficiaries, which subjects them to a transfer inheritance tax of 15% on property transfers up to $700,000 and 16% on amounts exceeding that threshold. By reclassifying step-grandchildren as Class A beneficiaries, the bill aims to provide them with the same tax exemptions enjoyed by direct descendants, thereby eliminating the tax burden on property transfers to step-grandchildren. The act is set to take effect on January 1, 2025.