If you searched for the New Jersey mansion tax and found a page saying the buyer pays a flat 1% on sales over $1 million, that page is describing law that no longer applies. The rule changed in the summer of 2025, and the change was not cosmetic: it moved the liability to the other side of the closing table and made the rate depend on price.
The tax is formally the Graduated Percent Fee under N.J.S.A. 46:15-7.2, amended by P.L. 2025 c.69. For deeds submitted for recording on or after July 10, 2025, the seller owes it. Everyone calls it the mansion tax, which is unhelpful, because at a $1 million threshold in the current New Jersey market it now reaches ordinary single-family homes in Bergen, Hudson and Essex counties.
Who pays the NJ mansion tax
The seller. For any deed submitted for recording on or after July 10, 2025, the Graduated Percent Fee is the seller’s legal responsibility.
Under the original 2004 law, the buyer paid a flat 1% at closing. That buyer-side fee was eliminated and replaced with a seller-side graduated fee. A narrow grace period applied to contracts fully executed before July 10, 2025 and recorded on or before November 15, 2025, which allowed a refund in limited circumstances; for practical purposes in 2026, that window has closed.
This is the single most important thing to verify before you sign. Sellers who priced a property on the assumption that the buyer absorbs this cost are now absorbing it themselves, and on a sale above $2 million the difference is not a rounding error.
The 2026 rate bands
The rate is set by the price band the sale falls into, then applied to the full consideration:
- 1% — $1,000,000.01 to $2,000,000
- 2% — $2,000,000.01 to $2,500,000
- 2.5% — $2,500,000.01 to $3,000,000
- 3% — $3,000,000.01 to $3,500,000
- 3.5% — above $3,500,000
Transfers of $1,000,000 or less are not subject to the fee at all. The fee applies to residential property, cooperative units, certain farm property that includes a residence, and Class 4A commercial property.
The rate applies to the entire price
This is the most expensive misunderstanding about the tax, and it predates the 2025 amendments.
The threshold decides which rate applies. That rate is then charged on the whole sale price, not only the portion above the threshold. A $1.2 million sale is not taxed on the $200,000 above $1 million; it is taxed 1% on the full $1.2 million, or $12,000.
The pricing cliff
Because the rate applies to the entire consideration, each band boundary is a cliff rather than a step.
A sale at exactly $2,000,000 sits in the 1% band: roughly $20,000. A sale at $2,000,000.01 sits in the 2% band, charged on the full price: roughly $40,000. One cent of additional consideration costs about $20,000 in additional tax.
That arithmetic is why the accepted price near a boundary is a legal question and not only a negotiating one. If your sale is landing anywhere near $2 million, $2.5 million, $3 million or $3.5 million, the structure of the contract deserves attention before you sign it.
What this means at closing
For sellers, the fee is deducted from proceeds at closing and is collected when the deed is recorded. It should appear in your net-sheet from the outset; discovering it late is how a seller ends up surprised by a five-figure line item.
For buyers, the practical effect in 2026 is that you no longer owe this fee — but you should expect it to be reflected in how sellers price property above $1 million, particularly just under a band boundary.
For both sides, the fee is separate from the standard Realty Transfer Fee, from county recording charges, and from the ordinary closing costs that apply to every transaction. Our NJ seller closing cost calculator and NJ buyer closing cost calculator estimate the rest of the picture.
How New Jersey compares to New York
If you are deciding between markets, or selling one property to buy another across the river, the two states now work in opposite directions.
In New York, the mansion tax is paid by the buyer, and it is graduated from 1% up to 3.9% at the very top of the market. In New Jersey, since July 2025, it is paid by the seller, graduated from 1% to 3.5%.
On a $5 million sale, a Hoboken seller absorbs the mansion tax while a Tribeca seller does not, because the New York buyer pays it there. At the very top of the market the relationship inverts again, since New York’s top rate exceeds New Jersey’s cap. If a transaction touches both states, talk to an attorney who handles both. The differences are not intuitive.
Frequently asked questions
Who pays the mansion tax in NJ?
For deeds recorded on or after July 10, 2025, the seller pays. Before that date the buyer paid a flat 1%. The 2025 amendments shifted the liability, so most guidance published before mid-2025 now states the opposite of the current rule.
How much is the NJ mansion tax in 2026?
It is graduated from 1% to 3.5% based on the sale price: 1% from $1,000,000.01 to $2,000,000; 2% to $2,500,000; 2.5% to $3,000,000; 3% to $3,500,000; and 3.5% above $3,500,000.
Is the tax only on the amount above $1 million?
No. The price band determines the rate, and that rate is charged on the entire consideration, not only the portion above the threshold. This is the most common and most expensive misunderstanding about the fee.
What is the pricing cliff?
Because the rate applies to the whole price, crossing a band boundary by one dollar can raise the bill sharply. A $2,000,000 sale is taxed at 1%, about $20,000. A $2,000,000.01 sale is taxed at 2% on the full price, about $40,000.
Is the mansion tax the same as the Realty Transfer Fee?
No. They are separate charges and a seller above $1,000,000 pays both. The Graduated Percent Fee sits on top of the standard Realty Transfer Fee.
Does New York work the same way?
No. In New York the buyer pays the mansion tax; in New Jersey, since July 2025, the seller does. If your transaction touches both states, the difference is worth reviewing before you sign.