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 In the FY20 National Defense Authorization Act (NDAA) conference report released Monday, December 9, the conferees repealed a decades-old injustice that took money from the pockets of surviving spouses.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spouses of active duty deaths to receive the full SPB until their children turned 18 (or 23, if in college), is also repealed.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.
Finally! This only makes sense. Shame on Congress for taking so long, mugging the widows of our heroes. Glad they made this important change. WELL DONE!
So does that mean we will get our full SBP and our DIC without paying tax?
Thanks from all of us windows, for any information, u have given us and can give us ,I am sure we would all appreciate all information ,u give to us. Wonder if we can hear replys also if able , thank u so much .,
Does this only apply to widows? What about widowers? There are plants of male dependents who don’t get recognition. It would be nice to see male spouses be included instead of assuming spouses are all female.
I believe “spouse” refers to men as well as women. “Widow’s Tax” is just a term.
My husband died 4 years ago,he serves 4 years in Army he had COPD and cancer, I need all info on the program,
Thanks,
K W.
When will widows of retired military veterans receive information on how they will receive SBP benefits in the future. My husband passed away a year ago a day before he received. 100% disability of lung cancer with presumptive cause of Agent Orang contrasted in Vietnam assignment and living at Little Rock AFB for five years that had leaks of dioxin from Transvaal Chemical. Company producing Agent Orange. I was shocked that the SBP program had been altered in 2007 because I would receive a small compensation from the VA after his death.
My disabled husband passed away in 2010. He was medically discharged in 1974. He paid into SBP up until his death. He had an appeal pending when he died, which I continued to fight for. In 2016 he was awarded 100% service connected death. They awarded me DIC, but because of the widows offset, they took back the SBP that I had received since his death. Now I have been struggling to get the cost refund (SBP premiums) back. Have been trying for 3 years. What will happen to the widows who had to pay back the SBP?
I’m confused and very worried, my husband passed in 1995 he was disabled 100 per cent. He paid into the SBP so would have something when he was gone, I hot the afterburner and I’m reading that congress has passed a bill that in February 2021 that it will be stopped, how can this be? I am so stressed dont know what to do.
ANOTHER THING I THINK IS UNFAIR IS WHEN THAT TOOK AWAY WIDOWS BENIFITS BASED ON HUSBANDS TIME IN SERVICE AND GAVE ALL WIDOWS THE SAME PAY BY RANK REGARDLESS OF. UMBER OF YEARS IN SERVICE.
I’m a little confused about this part: “In addition, the SBP child-only option …is also repealed. ”
I am hoping that this only applies to the Child Only beneficiary option granted to survivors of AD deaths, and not the Child Only option available to retiring service members?
That is my reading of the bill, but I’m not completely clear about it and I know others are confused as well.
Time to end the disability offset from vets pensions, who earned a regular military pension for time served. not medically retired. Your disability was determined for injuries related to service, there is no rational for this and is not done in the private sector. Even dumber, is that if you can get your VA rating over 50% then there is no offset! So if you are 49% disabled and retired you get nothing, and if you make it to 50% you get it all.
So does this affect the percentage for actual SBP which is currently 55%?
Rob, there is no 49% disability.. is only by 10s…
Phasing in of future benefits is a common ploy that,”Bean Counters”, use to justify their existence. It ignores the fact that many of us have fully funded the annuity by completing the 360 monthly deductions from retired pay. DIC has been paid for by physical disabilities incurred during my 28 years of active duty (1955 – 1983). I thank NMFA for it’s persistence.
Just saw that the off set
Also called widows tax went through the Santa today, and got axed, and therefore all of us will be phased in to receive and therefore be fully eligible to finally get the money our over ones paid in for.
Please add me to your list to receive any updates on the Widows Tax. Thanks much for your advocacy on this issue and all others.
Thank you NMFA for your work in this win to end the widow tax!
What will happen to SSIA that we currently receive? Right now it’s approximately one third of SBP?
My husband died in 2018 and I was awarded DIC in May of 2019 and was paid DIC from the date of his death. I was waiting for the premiums paid refund since that time and I haven’t heard anything. What is my status now.
Hello,
Am I understanding correctly? If a spouse is currently receiving SBP, and because of the elimination of the offset, the surviving spouse will be eligible for DIC. How will the effected spouses be notified?
Don’t get me wrong but the timeframe in which this is implemented is ridiculous! And I am sure the government will find a way to eliminate it before we even get the benefit!
I am very thankful for the support but I don’t believe this will ever get done! They pushed this back and the way they are doing the payments I will not count on it !
will they send us letter are what and when this will this start and what year let me know
I am 85 and might not see a penny of the money because it takes too long.
I have always wonder about all the
Deductions that were made during active duty! We opt out because ,
We would not receive it with out the deduction of Social Security!
Offset ?
So it like life insurance you loose
It because you stop paying !!
So what happens to all that money
the service member put in??
It should be like a savings account!! Making interest!!
THANKS!!THANKS!! GREAT NEWS!!
Keep me up-to-date please.
Will the tax be retroactively reimbursed?