Military 'Widow's Tax' under fire on Capitol Hill

Some lawmakers have begun asking Congress to repeal a provision known as the “Military Widows Tax,” which affects the income of some surviving military spouses after their partner dies.

Under current law, the benefits received by a surviving spouse can decrease, under certain circumstances, due to the government’s rules regarding the interaction between two separate benefit plans.

Those plans are the Department of Veterans’ Affairs Dependency and Indemnity Compensation (DIC) – which is a tax-free monthly annuity paid to those whose military spouse died from a service-related accident – and the military Survivor Benefit Plan (SBP), which is an elective annuity policy paid into by a military member.

The DIC kicks in automatically upon a death that is linked to military service.

However, when eligible for both, the surviving spouse of a retired military member – or a spouse killed in active military duty – will have their SBP payments reduced (or prorated) depending on the amount of DIC they receive. The SBP benefit is reduced dollar-for-dollar for some, leaving them without any of the SBP annuity, despite the fact that their family paid into the system.

Sen. Susan Collins, R-Maine, criticized the policy during a press conference this week.

“We have a duty to not only support the brave men and women in our military, but also to support their families. It makes absolutely no sense that there is an offset that applies to military families’ survivor benefits when service members used their own funds to purchase this extra insurance. That is the inequity that we are trying to correct,” Collins said, adding that, in some cases, the benefit of the SBP annuity is totally eliminated.

Sen. Doug Jones, D-Ala., recently reintroduced the Military Widow’s Tax Elimination Act of 2019 – of which Collins is a co-sponsor – a bipartisan effort that aims to repeal the so-called tax and provide authorized payments from both programs when the death of a military spouse is service-related.

According to Jones’ office, the average DIC offset to SBP pay is $925. It affects more than 65,000 surviving spouses.


“It is absolutely unacceptable that our federal government refuses to pay the widows and widowers of our nation’s heroes the full benefits they are entitled to, especially those benefit plans for which they have voluntarily paid into,” Sen. Jones, who is a member for the Senate Armed Services Committee, said in a statement.

About 67 senators have supported the bill, while 299 House members have supported companion legislation in their chamber.