New Jersey’s 2025 Mansion Tax Overhaul: What Buyers and Sellers Need to Know

Posted on: July 24, 2025

In July 2025, New Jersey restructured its mansion tax law, shifting payment responsibility to sellers and introducing a progressive rate structure for property sales over $1 million.

This blog breaks down the key changes, effective dates, tax brackets, and what buyers and sellers need to know to stay ahead.

What Changed in 2025?

On June 30, 2025, Governor Phil Murphy signed into law Assembly Bill A5804/S4666, overhauling New Jersey’s mansion tax rules. The new law became effective July 10, 2025, and applies to all qualifying property transfers from that date forward.

Key Changes at a Glance

Seller now pays the mansion tax (previously the buyer’s responsibility).
Progressive tax rates replace the flat 1%.
The tax now applies to the entire sale price, not just the amount over $1 million.
A temporary refund window exists for contracts signed before July 10.

2025 Mansion Tax Rate Table

Sale Price Range | Mansion Tax Rate

$1 million – $2 million | 1.0%

$2 million – $2.5 million | 2.0%

$2.5 million – $3 million | 2.5%

Example: Selling a $3 million property? Your tax bill = 2.5% $75,000.

Who Pays Now? (Spoiler: It’s the Seller)

Unlike the old mansion tax system, where buyers paid 1% at closing, the new law shifts that burden to sellers. That means sellers of qualifying properties must now factor the tax into their net proceeds.

Refund Window for Prior Contracts

If your contract was signed before July 10, 2025, and the deed is recorded by November 15, 2025, you may be eligible for a refund of any tax paid above 1%. This is a critical clause for anyone caught mid-deal during the transition.

What Sellers Need to Know

Higher closing costs: You’re now footing a bill that could reach hundreds of thousands of dollars.

Price accordingly: Factor tax into your asking price or net return expectations.
Refund eligibility: Track dates closely to reclaim excess tax if applicable.

What Buyers Need to Know

No mansion tax at closing: You save 1% automatically under the new rules.
Negotiation leverage: Use the seller’s added burden to your advantage.
Expect higher list prices: Sellers may bump up asking prices to offset taxes.

Why the Change?

With luxury real estate booming across New Jersey, lawmakers saw an opportunity to generate more revenue for affordable housing, infrastructure, and climate-related initiatives. The new progressive mansion tax aims to ensure higher-value properties contribute more to state funding.

Final Thoughts: Act Strategically

Whether you’re buying or selling, these changes are significant. Work with a real estate attorney or tax advisor to:

Time your deals effectively.
Calculate closing costs accurately.
Structures that reflect the new tax dynamics.
This isn’t just a new rate-it’s a new playbook.