Senator Doug Jones repeal of widows tax

U.S. Sen. Doug Jones shares a laugh with Ozark Mayor Bob Bunting during a press conference referencing legislation to repeal the “widow’s tax” with surviving military spouses in Ozark on Friday.

OZARK — U.S. Sen. Doug Jones celebrated next week’s anticipated repeal of the “widow’s tax” with surviving military spouses in Ozark on Friday.

“For the last four decades, the widow’s tax has prevented surviving spouses from receiving full survivor’s benefits that they are owed by the federal government,” he said.

The problem started when the government decided to offset the payouts of two military survivor benefits: the Dependency and Indemnity Compensation program and the Survivor Benefit Plan.

Dependency and Indemnity Compensation automatically awards survivors or veterans or troops who die of service-related causes around $15,000 a year. The Survivor Benefit Plan gives families of military retirees who enroll up to 55% of their loved ones’ retirement pay after the veteran dies. The life insurance-type payouts are subsidized by the Department of Defense, but require enrollees to pay in part of their retirement benefit to be eligible.

Individuals who qualify for either benefit receive full payouts from the respective programs. But family members who qualify for both are subject to an offset, where for each dollar paid out in Dependency and Indemnity Compensation their payouts under Survivor Benefit Plan are reduced by $1.

Jones noted that the offset is not communicated when service members enroll in the program and creates a financial burden on families that do not receive the money as expected.

Addressing the widow’s tax has been a bipartisan promise of Congress for years, but the expected cost — $5.7 billion over the next decade — has proven to be a barrier to finding a permanent solution.

In the defense bill for fiscal year 2020, lawmakers inserted a three-year phase-out of the offset. Starting Jan. 1, 2021, families affected by it will receive one-third of their full Survivor Benefit Plan payout. A year later, that will rise to two-thirds. In 2023, it grows to the full amount.

“This is money they paid in,” Jones said. “We’re not only helping the ladies that have been affected, but those that might be affected, God help us that no one in this area gets killed in the line of duty or dies of a service-related injury, but if they do, their spouse will have the full benefit from this point on, so it’s really important.”

Full benefits range from $900 to $1,300 a month for those who qualify.

“This is a big relief,” said one spouse who will directly benefit from the legislation. “I feel like he’s going to rest a lot of easier knowing that this burden is off my shoulders and our families and these other families feel respected now.”

In total, the bill is expected to affect 65,000 families across the U.S. and overseas.

The National Defense Authorization Act has passed in the U.S. House, and a final vote in the Senate will take place early next week, where it is expected to pass with broad, bipartisan support.

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