“Widow’s Tax” on Survivors Will Disappear by Feb. 1

Starting on Feb. 1, benefits checks will no longer have the “Widow’s Tax.” Mark Belinsky, a director of the Military Officers Association of America, said “the decision to eliminate the ‘widow’s tax’ was a ‘huge win’ and ‘the right thing to do.’”

What is the “Widow’s Tax?”

The “Widow’s Tax,” also known as the Survivor Benefit Plan (SBP) offset, reduced payment to spouses who were also eligible for the VA’s Dependency and Indemnity Compensation (DIC) allowances. DIC allowances are allowances for the surviving spouses of those who died during active service or those who died of injuries resulting from service.

Since the 2020 National Defense Authorization Act passed, the Defense Department has eliminated the SBP offset in phases. It should be totally phased out by Feb. 1. 

What is the Survivor Benefit Plan?

The Survivor Benefit Plan (SBP) is similar to life insurance, except that there is no cap. The SBP is designed to pay the beneficiary of a retiree up to 55% of the retiree’s retirement check each month after the retiree’s passing. The payments continue for the rest of a surviving spouse’s life or until a child reaches an age cap. 

Despite the many benefits of the SBP, the Widow’s Tax caused many to forgo enrolling in the program. Thanks to the 2023 National Defense Authorization Act, service members will once again have the opportunity to either enroll in or leave the program.

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