Veterans Corner September 2019

Widows’ Tax Repeal Efforts


It’s time for Congress to fix a longtime wrong: legislation that requires survivors of deceased military members to forfeit part or all of their Survivor Benefit Plan (SBP) annuity from the Dept. of Defense (DOD) when they are awarded the Dept. of Veterans Affairs’ Dependency and Indemnity Compensation (DIC). What makes this legislation a priority is SBP is a purchased annuity and DIC is a VA-paid monetary recompense for survivors whose sponsors died of a service-related injury or disease. These are two different and separate payments for two different reasons, made by two different agencies. Both are earned. No other federal annuity is structured with this offset.

This forfeiture has become known as the “widows’ tax.”  Surviving spouses of active duty or retired service members who purchased SBP and died of a service-connected cause are forced to forfeit $1 of their military SBP for each $1 received from the VA’s DIC compensation. This offset wipes out most or all of the SBP check for a majority of survivors for a total loss of approximately $12,000 annually. This includes service members who purchased the plan through deductions from their retired pay.

What other insurance policy sold in the United States is permitted to withhold a death payment to a legal beneficiary? Would this be allowed if a company selling life insurance withheld death payments from beneficiaries? The courts would certainly intervene, as would Congress. So why should the widows’ tax be allowed to continue? 

The widows’ tax defies logic and should be repealed. But the question then becomes, as it always does with Congress, who will pay the difference? When the issue is analyzed, the needle would certainly point to DOD, since it’s the agency that “sold” the SBP policy to service members – and DOD is the banker for all the distributions.

As of this writing, there are approximately 228 House members and 57 Senators who have co-sponsored legislation to repeal the widows’ tax. Other members of Congress need to join in and then fund this correction without sacrificing other benefits.

Interested parties are urged to contact their U.S. Representative and Senators asking for their support of current legislation efforts addressing this problem.  Perhaps all members would be well served to remember the words of Abraham Lincoln in talking about veterans and their dependents: “To care for him who shall have borne the battle and for his widow, and his orphan.”

Note: This article is taken from a nonprofit Military Officers Association of America article by Tom Jukowsky, a retired U.S. Navy rear admiral.