The Widow’s Tax Repeal: What you Need to Know
THE WIDOW’S TAX WILL BE ELIMINATED IN FY20 NATIONAL DEFENSE AUTHORIZATION ACT
See the full article on the National Military Family Association (NMFA) website at https://www.militaryfamily.org/the-widows-tax-will-be-eliminated/.
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 In the FY20 National Defense Authorization Act (NDAA) conference report released Monday, December 9, the conferees repealed a decades-old injustice that took money from the pockets of surviving spouses.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. SPB 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…
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.