Who Pays the Mansion Tax in New Jersey Now? What Sellers Need to Know

As of July 10, 2025, New Jersey's so-called mansion tax is paid by the seller, not the buyer.

Under New Jersey's updated Graduated Percent Fee, the fee applies when a qualifying property sells for more than $1 million. It starts at 1% and increases based on the final sale price. And here's the part that catches people off guard: the percentage applies to the entire sale price, not just the amount over the threshold.

So if your Westfield home sells for $1.2 million, the fee is $12,000.

And yes, that's on top of the regular Realty Transfer Fee sellers already pay.

By Galina Kaplan and Marina Fridman-Rybner | August 17, 2026

"Wait. I Thought the Buyer Paid That."

We hear this all the time.

And sellers aren't wrong for thinking it. For more than 20 years, New Jersey's mansion tax was generally a buyer expense. Buyers knew to budget for that extra 1% when purchasing a home over $1 million.

That changed in 2025.

For transfers occurring on or after July 10, 2025, the responsibility shifted from the buyer to the seller. The old flat 1% structure was also replaced with graduated rates:

More than $1M through $2M: 1%
More than $2M through $2.5M: 2%
More than $2.5M through $3M: 2.5%
More than $3M through $3.5M: 3%
More than $3.5M: 3.5%

Source: New Jersey Division of Taxation — Graduated Percent Fee on Certain Transfers of Real Property Over $1 Million.

The big thing to understand is that the percentage applies to the full sale price.

If your home sells for $2.2 million, you're not paying 2% on the $200,000 above $2 million.

You're paying 2% on $2.2 million.

That's $44,000.

At the higher end of our market, these numbers get significant very quickly.

What Does This Actually Look Like at Closing?

Here are a few examples:

$1,100,000 sale → $11,000 fee

$1,400,000 sale → $14,000 fee

$2,200,000 sale → $44,000 fee

$3,600,000 sale → $126,000 fee

These aren't small numbers, especially when you're also calculating commissions, attorney fees, the Realty Transfer Fee and the other expenses involved in selling a home.

But here's where things get interesting in the market we're in right now.

The Seller Pays It — But We're Seeing Buyers Get Creative

On paper, the seller is responsible for the mansion tax.

In the real world, we're in a very strong seller's market in many North Jersey towns. When several buyers are fighting for the same house, we've seen buyers look for different ways to make their offer stand out.

And sometimes that means offering to offset part of the seller's mansion tax.

Let's say a home is selling for $1.5 million. The mansion tax would be $15,000.

We've seen buyers essentially say:

We'll split it with you.

That's another $7,500 in value to the seller.

And in an especially competitive situation, a buyer may even offer enough additional consideration to effectively cover the entire $15,000.

That doesn't change the fact that the seller is legally responsible for the fee. The attorneys still need to structure everything correctly.

But from a negotiation standpoint, it's another tool buyers are using.

And that's something we wouldn't have talked about nearly as much a few years ago.

Today, when five or ten buyers may be competing for the same house, the strongest offer isn't always just the one with the highest number.

Price matters. Financing matters. Inspection terms matter. Appraisal terms matter. Closing date matters.

And sometimes helping offset a seller's closing costs can make one offer look very different from another.

Pay Attention to the Tier Lines

This is probably the most important part for sellers with homes around $2 million, $2.5 million, $3 million or $3.5 million.

Let's use $2 million as an example.

If your home sells for exactly $2 million, the Graduated Percent Fee is 1%, or $20,000.

If it sells for $2,010,000, you've crossed into the next tier.

Now the rate is 2% of the entire $2,010,000.

That's $40,200.

You sold the house for $10,000 more, but the mansion tax increased by $20,200.

That doesn't automatically mean the lower offer is better. There may be other terms involved, and the overall economics of the transaction matter.

But it does mean that the highest offer isn't always the offer that nets you the most money.

That's why we look at the entire offer, not just the number at the top of the contract.

What Happens When a Bidding War Pushes You Into Another Tier?

This is especially relevant in Westfield and the surrounding towns because we're still seeing homes sell significantly over asking.

The mansion tax isn't based on your list price.

It's based on your final sale price.

Say you list at $1,950,000.

If your winning offer is $1,990,000, the mansion tax is $19,900.

But if multiple offers push the sale price to $2,100,000, you've crossed into the 2% tier and the fee becomes $42,000.

That's a $22,100 difference in the mansion tax alone.

Does that mean you don't want $2.1 million?

Of course not.

It means we need to actually do the math.

When we're reviewing multiple offers with a seller, we're looking at what they're netting, not simply which buyer wrote the biggest number.

Should You Price Under $1 Million to Avoid the Mansion Tax?

We get this question too.

Usually, no.

Your asking price doesn't determine the mansion tax anyway. Your final sale price does.

And in a seller's market, deliberately trying to keep your sale price below a threshold can cost you considerably more than the tax you're trying to avoid.

If buyers are willing to pay $1.1 million for your home, losing $100,000 in sale price to avoid an $11,000 fee obviously doesn't make sense.

The better strategy is to know the numbers ahead of time.

If we think your home is going to sell around $1.4 million, let's calculate your net at $1.4 million.

If we think it could land anywhere between $1.9 million and $2.1 million, let's run both scenarios because that $2 million threshold matters.

No surprises at closing.

Is the Mansion Tax the Same as the Realty Transfer Fee?

No.

The Realty Transfer Fee is a separate New Jersey closing cost that sellers have paid for years.

The Graduated Percent Fee — what most people still call the mansion tax — is an additional fee on qualifying transactions over $1 million.

So if you're selling above $1 million, both need to be included when you're estimating your closing costs.

Frequently Asked Questions

Does the mansion tax apply if my home sells for exactly $1 million?

No. The current Graduated Percent Fee applies when the sale price is more than $1,000,000.

At $1,000,000 exactly, you haven't crossed the threshold.

At $1,000,001, you have.

Can a buyer pay my mansion tax?

Legally, the seller is responsible for the Graduated Percent Fee.

But real estate contracts have a lot of moving pieces, and in a competitive market buyers can structure offers that provide additional value to a seller.

We've seen buyers offer to effectively offset half — and sometimes even all — of this expense as part of making their offer more attractive.

How that's structured should always be handled by the attorneys.

What happens if multiple offers push my home into the next tax tier?

The fee is based on your final sale price, so yes, a bidding war can push you into a higher tier.

That's why we pay particularly close attention to offers around $2 million, $2.5 million, $3 million and $3.5 million.

Is the mansion tax separate from the Realty Transfer Fee?

Yes. They're two separate seller expenses.

Are there exemptions?

There are exemptions for certain types of property transfers and transactions. If you think your sale may qualify, this is something to discuss with your real estate attorney before calculating your final proceeds.

What We Tell Our Sellers

Don't wait until you're under contract to figure out what you're actually going to walk away with.

Before we list a home, we want to have a pretty good idea of three things:

What can the house realistically sell for?

What will it cost to sell?

What are you actually walking away with?

The new mansion tax is simply another piece of that equation.

And in today's market, where multiple offers can push a home well beyond its asking price — and buyers may even be willing to help offset some of the seller's costs to make their offer stand out — the final number can look very different from what you expected when you first put the house on the market.

If you're thinking about selling in Westfield or the surrounding North Jersey suburbs, comment NETSHEET or reach out to us.

We'll run the numbers at a few different sale prices so you can see what you'd actually walk away with before making any decisions.

About The GAMA Team

The GAMA Team, founded by Galina Kaplan and Marina Fridman-Rybner, helps buyers, sellers and relocating families throughout Westfield and North Jersey navigate the market with strategic pricing, strong marketing and hands-on negotiation.

As former New Yorkers who now call Westfield home, we understand both sides of the move. Our job isn't simply to get a home sold. It's to help our clients understand the numbers, the strategy and the decisions that come with it from the first conversation through closing day.

Sources

New Jersey Division of Taxation — Graduated Percent Fee on Certain Transfers of Real Property Over $1 Million
https://www.nj.gov/treasury/taxation/realty.shtml

New Jersey P.L. 2025, c. 69 — Modifies Payer of Additional Fees and Taxes Imposed on Certain Real Property Transfers
https://pub.njleg.state.nj.us/Bills/2024/AL25/69_.HTM

Disclaimer

This article is provided for general informational purposes only and is not intended to constitute legal, tax, or financial advice. New Jersey real estate transfer fees and their application can vary depending on the property and transaction. Buyers and sellers should consult with their real estate attorney and/or tax professional regarding their specific circumstances.