Two Things Changed, and Both Cost You
From 2004 until mid-2025, the mansion tax was a flat 1 percent, and the buyer paid it. Sellers in Bergen and Hudson County treated it as somebody else's line item.
That ended. Under the FY 2026 state budget legislation, signed June 30, 2025 and effective for deeds recorded on or after July 10, 2025, two things changed at once. The fee shifted to the seller, and the flat rate became a graduated schedule topping out at 3.5 percent.
The New Jersey Division of Taxation now calls it the Graduated Percent Fee, and it sits on top of the standard Realty Transfer Fee, which the seller was already paying. If you have read an older article on this site or anywhere else saying the buyer pays 1 percent, that article is describing a law that no longer exists.
The Rate Applies to the Whole Price
This is the part that catches people, and it is worth reading twice. The tiers are not marginal. The rate is not applied only to the amount above each threshold the way income tax brackets work. The applicable rate applies to the total consideration.
Sale price | Rate | Fee |
|---|---|---|
$1,500,000 | 1% | $15,000 |
$2,000,000 | 1% | $20,000 |
$2,000,001 | 2% | $40,000 |
$2,599,000 | 2.5% | $64,975 |
$3,000,000 | 2.5% | $75,000 |
$3,600,000 | 3.5% | $126,000 |
Look at the third and fourth rows. One additional dollar of sale price, from $2,000,000 to $2,000,001, moves the seller from the 1 percent tier to the 2 percent tier and doubles the fee from $20,000 to $40,000. That single dollar costs $20,000.
I have not seen many sellers or agents run that math before countering. It belongs in every negotiation on a home near one of those lines, and it is a genuine argument for accepting the cleaner offer at the round number instead of pushing for the extra ten thousand.
What This Does to a Bergen County Net Sheet
Bergen County has a deep inventory above $1 million, so this is not an edge case here the way it is in much of the state. Englewood, Tenafly, Alpine, Cresskill, Closter, Franklin Lakes, and the Fort Lee bluff all trade regularly in the affected bands.
Work an example. A $2,599,000 sale carries a Graduated Percent Fee of $64,975. Add the standard Realty Transfer Fee, which the seller already owed, plus attorney fees, title work, payoff figures, and negotiated commission, and the gap between the contract price and the wire at closing is wider than most sellers assume when they set an asking price.
The practical consequence: a net sheet built on pre-July-2025 assumptions is wrong by tens of thousands of dollars on a high-end sale. If your last conversation about proceeds happened before that date, or if it happened with someone working from an old worksheet, run it again.
Exemptions and the Fine Print
New Jersey recognizes exemptions, and they are claimed on Form RTF-1EE, the Affidavit of Consideration for Graduated Percent Fee, which must be annexed to every deed for consideration over $1,000,000.
The fee applies to residential property, cooperative units, certain farm property containing a residence, and Class 4A commercial property. Vacant land and qualified farm property carry specific exemptions from the graduated fee. Sellers who are 62 or older, blind, or permanently disabled may claim a partial exemption on the standard Realty Transfer Fee for an owner-occupied home, claimed on the affidavit at closing.
I am a real estate broker, not an attorney or a CPA. Your closing attorney prepares and files these affidavits, and the exemption analysis belongs to them. What I can tell you is which side of a threshold your likely sale price falls on, and that conversation should happen before the listing goes live.
How to Plan Around It
Three moves, in order.
First, price with the thresholds in view. If your realistic value sits between $1.9 million and $2.1 million, understand what a $2,000,001 contract actually nets versus a $2,000,000 contract. That is a pricing strategy conversation, not an accounting one, and it happens before you list. The broader timing question is in when to list your home.
Second, build the real net sheet. Contract price minus the Graduated Percent Fee, the standard Realty Transfer Fee, negotiated commission, attorney fees, payoffs, and any credits negotiated after inspection. A current home valuation is the honest input, because the fee is calculated off the actual sale price rather than your estimate of it.
Third, sequence it with everything else on your closing statement. If you are moving out of state, the New Jersey exit tax withholding is a separate line that sits on the same settlement sheet, and the two interact with your timing. Once you are under contract, the deadlines in what happens after you accept an offer govern the rest.
A tax you did not know about does not change what you owe. It only changes whether you found out in time to do something about it.
Ready to Run Your Real Net Number?
If your home is worth more than $1 million and you have not rebuilt your net sheet since July 2025, that is the conversation worth having first.
Start with the seven-question assessment at quiz.sellecksellsnj.com, or schedule a consultation and we will run the thresholds against your property.
The Three Pillars Behind Every Smart Decision
Every real estate decision sits where timing, cash-flow, and lifestyle fit meet. Work all three or the math stops holding.
Timing & Strategy
Price with the thresholds in view, because the cliff at each tier is a pricing decision. Start with the seven-question assessment at quiz.sellecksellsnj.com.
Financing & Cash-Flow
What lands in your account after the fee decides what the next purchase can carry. See the advisory approach at scott.sellecksellsnj.com.
Lifestyle & Location Fit
Bergen County trades in every affected band, so the town shapes the exposure. Compare towns in the guides at communityguides.sellecksellsnj.com.
Frequently Asked Questions
Who pays the mansion tax in New Jersey in 2026?
The seller. For deeds recorded on or after July 10, 2025, responsibility for the fee, now called the Graduated Percent Fee, shifted from the buyer to the seller under the FY 2026 state budget legislation signed June 30, 2025.
What are the New Jersey mansion tax rates now?
The rates are graduated: 1 percent on sales over $1 million up to $2 million, 2 percent over $2 million to $2.5 million, 2.5 percent over $2.5 million to $3 million, 3 percent over $3 million to $3.5 million, and 3.5 percent above $3.5 million.
Is the New Jersey Graduated Percent Fee applied only to the amount over the threshold?
No. The applicable rate applies to the total consideration, not just the portion above the threshold. That creates a cliff at each tier boundary. A $2,000,001 sale is taxed at 2 percent on the full amount, producing a $40,000 fee, while a $2,000,000 sale is taxed at 1 percent for $20,000.
Is the Graduated Percent Fee the same as the Realty Transfer Fee?
No. They are separate charges that both fall on the seller. The Realty Transfer Fee has applied to New Jersey conveyances since 1968. The Graduated Percent Fee is a supplemental fee that applies only when consideration exceeds $1 million, and it is reported on Form RTF-1EE.
Are there exemptions from the New Jersey mansion tax?
Yes. Exemptions are claimed on Form RTF-1EE, which must be annexed to every deed for consideration over $1,000,000. Vacant land and qualified farm property carry specific exemptions from the graduated fee, and other transfers may qualify. Your closing attorney handles the exemption analysis and filing.
This article is general information only and is not legal, tax, or financial advice. Fee tiers and exemptions are summarized from the New Jersey Division of Taxation and published legal analysis as of 2026 and can change. Confirm your specific figures with your closing attorney and tax advisor before acting. Commission in New Jersey is fully negotiable and is not set by law or by any board or association of Realtors.
Top 5 Sources
- New Jersey Division of Taxation, Realty Transfer Fee and Graduated Percent Fee guidance.
- New Jersey Realtors, Graduated Percent Fee summary and effective dates.
- Published legal analysis of N.J. S5000 and the FY 2026 budget amendments to N.J.S.A. 46:15-7.2.
- Scott Selleck Foundation Document for voice, positioning, and advisory framing.
- Scott Selleck Link Directory for CTA structure, internal linking, and required site references.
