The federal gift and estate tax are set at very high levels and only those with multi-million dollar estates are subject to the federal tax. But this does not mean that everyone else gets away tax free. Instead, states usually impose much lower bars for the estate and gift tax to apply, such as the New Jersey inheritance tax.
The federal estate tax exemption is $5 million. This means that estates worth more than $5 million are subject to an estate tax of 35 percent. The federal gift tax exemption is also set at $5 million, and gifts over this amount are similarly subject to being taxed at the 35 percent rate, reports The Star-Ledger.