Could the Military 'Widow's Tax' Finally Get Abolished? Here's the Next Hurdle

With overwhelming support in Congress, two senators hope this is the year a dollar-for-dollar offset in compensation to surviving military spouses of military personnel and retirees -- known colloquially as the "widow's tax" -- is eliminated.

Sen. Susan Collins, R-Maine, and Sen. Doug Jones, D-Alabama, took to the Senate floor Monday urging for a vote on their proposed amendment to the national defense policy bill to overturn the offset.

The legislation, which has the backing of 75 senators, would repeal deductions taken from those who receive payments under the Defense Department's Survivor Benefit Plan and also get Dependency and Indemnity Compensation from the Department of Veterans Affairs.

Under the Survivor Benefit Plan, military retirees pay a portion of their retirement benefit to ensure that family members receive up to 55% of their retirement pay when they die.

The program, which is subsidized by the Defense Department, requires retirees to pay up to 6.5% of their gross retired pay, depending on the amount of coverage desired, much like an insurance plan.

On the other hand, DIC is automatically awarded to surviving families of troops or veterans who die of service-related conditions.

But under the current system, family members who receive both see their SBP reduced dollar for dollar for the amount they receive in DIC.

In some cases, Collins said, the offset can lead to total elimination of the Survivor Benefit Plan.

"It is out and out unfair and harms the survivors of our service members and military retirees," Collins said Monday. "The average offset [of $925] is a significant amount of money that the widower or widow needs to support themselves and their families in the absence of their service member."

Related: Momentum Grows in Congress to Overturn Controversial Military 'Widow's Tax'

Roughly 65,000 military family members are affected by this offset, which amounts to a loss of more than $65 million in income each year. Jones said given that the family members paid into the Survivor Benefit Plan, they should receive full payment of both benefits.

"We obviously can never repay these families for their loss. ... But we can dang sure stop the government from robbing them of the benefit they have paid for and earned."

The Senate voted 86-6 Monday to take up debate this week of its version of the National Defense Authorization Act, a $750 billion bill that will support military programs and policies in fiscal 2020.

Senators have offered nearly 600 amendments to the NDAA. But which of the amendments, if any, will receive a vote remains to be seen. In recent years, debate on most amendments has been blocked by members, especially proposals that are considered controversial or non-negotiable.

Elimination of the "widow's tax" has been proposed numerous times in the last 18 years. Critics have argued that the cost, estimated to be $5.7 billion over a decade, must have a funding source before it can be seriously considered.

Jones said, however, that previous congresses have not required the proposed legislation to have a funding source, also known as a "pay-for" or "pay-go," adding that it shouldn't be required now.

Collins agreed.

"We have an obligation to make sure we are taking care of our military families who have sacrificed so much," Collins added.

-- Patricia Kime can be reached at Patricia.Kime@Military.com. Follow her on Twitter at @patriciakime.