Nutrient loads delivered to estuaries via submarine groundwater discharge (SGD) play an important role in the nitrogen (N) budget and eutrophication status. However, accurate and reliable quantification of the chemical flux across the final decimeters and centimeters at the sediment–estuary interface remains a challenge, because there is significant potential for biogeochemical alteration due to contrasting conditions in the coastal aquifer and surface sediment. Here, a novel, oxygen- and light-regulated ultrasonic seepage meter, and a standard seepage meter, were used to measure SGD and calculate N species fluxes across the sediment–estuary interface. Coupling the measurements to an endmember approach based on subsurface N concentrations and an assumption of conservative transport enabled estimation of the extent of transformation occurring in discharging groundwater within the benthic zone. Biogeochemical transformation within reactive estuarine surface sediment was a dominant driver in modifying the N flux carried upward by SGD, and resulted in a similar percentage of N removal (~ 42–52%) as did transformations occurring deeper within the coastal aquifer salinity mixing zone (~ 42–47%). Seasonal shifts in the relative importance of biogeochemical processes including denitrification, nitrification, dissimilatory nitrate reduction, and assimilation altered the composition of the flux to estuarine surface water, which was dominated by ammonium in June and by nitrate in August, despite the endmember-based observation that fixed N in discharging groundwater was strongly dominated by nitrate. This may have important ramifications for the ecology and management of estuaries, since past N loading estimates have generally assumed conservative transport from the nearshore aquifer to estuary.