Defense Bill To Fix 'Widow's Tax' On Military Death Benefits

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Defense Bill To Fix 'Widow's Tax' On Military Death Benefits
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A bill funding the Defense Department will finally end a policy military families have hated for decades: the so-called widow’s tax, which prevents survivors from receiving full benefits from both the Pentagon and the Department of Veterans Affairs

WASHINGTON ― .

It’s a tiny part of the $738 billion defense bill, but it’s a huge deal for veterans service organizations that have been lobbying for decades to undo the widow’s tax. The outcome seemed uncertain even days ago. Roughly 65,000 surviving spouses are affected by the offset. Some designate their children as beneficiaries in order to receive the full benefits, but that strategy started backfiring this year as a result of the tax law Republicans passed at the end of 2017. Republicans changed the taxation of children’s unearned income, targeting tax avoidance but not realizing it would clobber military families.

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