The "Exit Tax" is not a special or additional tax.
NJ Law requires that non-resident individuals who sell or transfer real property located in New Jersey make a NJ Gross Income Tax estimated tax payment on the gain as a condition of the recording of the deed.
Many New Jersey residents selling their homes and moving permanently out of state were utilizing the GIT/REP3 (Resident) form, based on the assumption they would be filing New Jersey income taxes for that tax year and would pay the taxes (if any) on the sale of the property at that time. As of July 2007, they can no longer do so. The state Division of Taxation has "amended" their position that, in order to utilize the Resident form, the seller MUST be moving to a New Jersey address as of the date of deed transfer, or they must use the Non-Resident (GIT/REP1) form, thereby requiring them to pay the minimum 2% of the deed consideration directly to the state.
The tax payment is determined by multiplying the gain on the sale by the top NJ tax rate of 8.97%. The payment cannot be less than 2% of the "consideration" received - or gross proceeds from the sale.
A resident taxpayer who will file a NJ-1040 for the year is exempt from making the estimated tax payment.
This is not an "exit tax", but an estimated tax payment. The purpose is to make sure that the non-resident individual files a Form NR-1040 to report the sale and pay tax on the gain. Because the required estimated Tax payment is made at the highest tax rate, the individual should receive and be entitled to a refund on the NJ-1040.