New Jersey's Mansion Tax Is Now the Seller's Problem: What Changed on July 10, 2025

If you've been researching the cost of buying or selling a home in New Jersey, you may have come across references to the "mansion tax" — a fee that applied to residential transactions at $1,000,000 or more. As of July 10, 2025, that tax has been significantly restructured. The name has changed, who pays it has changed, and the rate structure has changed.

Here is what you need to know.

What Changed

Before July 10, 2025, New Jersey imposed a flat 1% mansion tax on the buyer for any residential purchase at $1,000,000 or more. A buyer purchasing a $1,200,000 home owed $12,000 at closing — on top of title insurance, attorney fees, and all other buyer costs.

Effective July 10, 2025, the fee is now paid by the seller. The rate is no longer flat — it is graduated, starting at 1% and rising to 3.5% on the highest-value sales. The rate applies to the entire purchase price, not just the amount above the threshold.

The Graduated Rate Structure

The new fee is officially called the "Graduated Percent Fee." The rate tiers are:

|----------------|------|

Because the rate applies to the full purchase price — not just the amount above each tier — the jump at each threshold is significant. A seller closing at $2,000,000 owes 1.5% on the entire $2,000,000 ($30,000), not 1% on the first $2,000,000 and 1.5% on the remainder.

What This Means If You Are Buying in New Jersey

If you are buying a home in New Jersey above $1,000,000, you no longer owe this fee at closing. That is a meaningful change — on a $1,200,000 purchase, buyers previously owed $12,000 in mansion tax. That cost is now gone from the buyer's side of the ledger.

That said, sellers are aware of this cost and will factor it into their pricing and negotiating position. A seller who previously would have netted $1,200,000 on a deal now has to account for a $12,000 fee against their proceeds. Whether that translates into a higher asking price, less flexibility on concessions, or simply a tighter net for the seller depends on the individual transaction. The fee is real — it has just moved to the other side of the table.

If you are buying near the $1,000,000 threshold, the dynamic has also shifted. Previously, buyers had a strong incentive to keep the purchase price below $1,000,000 to avoid the tax. Now that incentive is on the seller's side — a seller pricing at $1,050,000 owes 1% on the full amount ($10,500); a seller pricing at $995,000 owes nothing. That creates a different kind of negotiating pressure near the threshold than buyers were used to dealing with before.

What This Means If You Are Selling in New Jersey

If you are selling a New Jersey home above $1,000,000, the Graduated Percent Fee is now a line item against your net proceeds. At the 1% tier, a $1,200,000 sale costs $12,000. At the 1.5% tier, a $2,100,000 sale costs $31,500. These are not small numbers, and they need to be factored into your net proceeds calculation before you accept an offer.

Your attorney should include this in your closing cost estimate from the beginning of the transaction — not as a surprise at the settlement table.

The Practical Takeaway

The law changed. If you are working from information you gathered before July 2025 — from a friend, a real estate agent, or an older article online — the NJ mansion tax information you have is likely outdated. The buyer no longer pays it. The seller does, at a graduated rate.

If you are buying or selling in New Jersey above $1,000,000, make sure your attorney is current on the new structure and has modeled it into your cost estimate.

Pete Weinman, Esq. is a residential real estate attorney licensed in New York and New Jersey. If you are selling on Staten Island and buying in New Jersey — or selling in New Jersey — contact Pete at 718-442-2010 or [email protected].

260 Christopher Lane, Suite 201 | Staten Island, NY 10314