WASHINGTON – U.S. Senator Amy Klobuchar (D-MN) introduced legislation to prevent changes in the 2017 Tax Cuts and Jobs Act from unduly harming Gold Star military families. Under current law, spouses of deceased service members are eligible to receive two different survivors benefits--the Department of Veterans Affairs' Dependency and Indemnity Compensation and the Department of Defense (DOD) Survivor Benefits Plan. Many spouses choose to sign the taxable DOD benefit over to their children. Previously, children receiving this benefit were taxed at the parent's rate, but President Trump's Tax Cuts and Jobs Act made changes to certain tax provisions that now treat the survivors benefit going to children as a trust or estate. As a result, the benefit can now be taxed at much higher rates—up to 37 percent compared with an average of 12 percent to 15 percent prior to the 2017 tax bill. The Gold Star Family Tax Relief Act will correct the tax law and bring the tax rate down to its previous level for Gold Star military families.
“Gold Star families have made the ultimate sacrifice for our country –– they shouldn’t have to sacrifice more,” Klobuchar said. “Our legislation will reverse the devastating mistake in the 2017 tax law that resulted in a much higher tax rate on Gold Star Families’ survivor benefits. The families of our fallen heroes deserve our gratitude, not a bill.”
The bill is also led by Senators Bill Cassidy, M.D. (R-LA), Doug Jones (D-AL), and Pat Toomey (R-PA) and has 25 other bipartisan cosponsors.
“This bipartisan legislation helps those who lost a husband or wife, a father or mother, serving in the military to protect us. This legislation fixes an unintended problem and lessens the taxes of the surviving spouse,” Dr. Cassidy said. “The Tax Cut and Jobs act has helped millions. I thank Democratic colleagues for joining to improve the law and ensure more Americans benefit.”
“Gold Star families have given more to our country than most of us could ever imagine. While we can never repay their immense sacrifices, we do make a solemn commitment to care for them,” Jones said. “Unfortunately, thousands of these widows and widowers are currently denied the full benefits they’re due, which forces many to resort to putting some of these benefits in their children’s names. To significantly raise taxes on those children’s benefits is unconscionable, and I am proud to join with my colleague Senator Cassidy to propose legislation to correct this egregious mistake. It is a first step toward honoring our commitment and making these families whole financially.”
“Gold Star families have all endured a terrible tragedy – the loss of a loved one in service to our nation – and deserve the gratitude of all Americans,” Toomey said. “The Department of Defense has long provided for the economic wellbeing of children who have lost a parent in military service through survivor benefits. Unfortunately, these benefits are currently being subjected to a higher tax rate than intended. Our bipartisan measure will correct this problem. I appreciate the work of Gold Star families who have led the fight to have Congress address this issue.”
Full text of the Gold Star Family Tax Relief Act can be found here.
Since coming to the Senate, Klobuchar has worked to make sure that veterans and service members who have defended our freedom and security have the resources they need and deserve. Last month, she sent a letter urging the U.S. Department of the Treasury to urgently assess options to prevent the harms created by this tax code change for Gold Star families. Klobuchar worked to pass the landmark Post-9/11 GI Bill, which provided enhanced tuition and housing benefits to service members seeking to continue their education and smoothly transition into the civilian workforce. She also supported the pivotal Caregivers and Veterans Omnibus Health Services Act, which not only improved support and training for family caregivers – who often carry the largest burden of nursing our wounded warriors back to health – but also strengthened health programs for women and rural veterans.
In 2018, provisions based on Klobuchar and Senator Thom Tillis’ (R-NC) Helping Veterans Exposed to Burn Pits Act were signed into law as part of the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act. The bipartisan legislation will create a Center of Excellence in the Department of Veterans Affairs (VA) focused on researching the health effects associated with burn pits and treating veterans who become sick after exposure. In March, they reintroduced the Newborn Care Improvement Act, bipartisan legislation that would double the number of days veterans receive care for their newborns from 7 to 14.