The Widow’s Tax Will Be Eliminated in FY20 National Defense Authorization Act
Survivor Benefit Plan/Dependency and Indemnity Compensation (SBP/DIC) Offset Is On Its Way Out
Alexandria, VA — The National Military Family Association (NMFA), a nonprofit that works to strengthen military families, is celebrating a major win for the widows of America’s service members. In the FY20 National Defense Authorization Act (NDAA) conference report released Monday, December 9, the conferees repealed a decades-old injustice that took money from the pockets of surviving spouses.
The creation of the Survivor Benefit Plan (SBP) in 1972 was NMFA’s first legislative success. SBP allows a military retiree or retirement-eligible service member to ensure a continuous lifetime annuity for their dependents. However, a VA benefit called the Dependency and Indemnity Compensation (DIC) offsets the money a widow would receive from SBP, dollar-for-dollar. This offset is sometimes referred to as a “widow’s tax.” SBP and DIC are different programs, paid for by different federal agencies.
“When someone volunteers to serve, they do so believing their family will be taken care of if the worst happens,” said NMFA Executive Director and CEO Ashish Vazirani. “We have not been properly taking care of those families. The news that decades of advocacy have finally paid off is something to celebrate.”
The FY20 NDAA completely eliminates the Widow’s Tax, but in phases. No changes will take place in calendar year 2020. In 2021, one-third of the SBP will be restored. In 2022, two-thirds will be restored. On January 1, 2023, the SBP will be completely restored and surviving spouses will receive their SBP and DIC payments in full.
“We’ve been working to eliminate this unfair widow’s tax for over 20 years,” said NMFA Government Relations Director Kelly Hruska. “But this year was different thanks to the grassroots effort from surviving spouses. They have organized and fought a campaign that would make any military proud.”
In addition, the SBP child-only option, which was a work-around created after 9/11 for surviving spouses of active duty deaths to receive the full SPB until their children turned 18 (or 23, if in college), is also repealed. The surviving spouses who elected to use that benefit, can restore their eligibility regardless of their children’s ages.
The conferees have done their work to eliminate the unfair Widow’s Tax. Now, the FY20 NDAA must pass in the House and Senate. If both chambers pass the bill, it must then be signed by the President.
The National Military Family Association
The National Military Family Association is the leading nonprofit dedicated to serving the families who stand behind the uniform. Since 1969, NMFA has worked to strengthen and protect millions of families through its advocacy and programs. We provide spouse scholarships, camps for military kids, and retreats for families reconnecting after deployment and for the families of the wounded, ill, or injured. NMFA serves the families of the currently serving, retired, wounded, or fallen members of the Army, Navy, Marine Corps, Air Force, Space Force, Coast Guard, and Commissioned Corps of the USPHS and NOAA.
