Bipartisan legislation would provide tax relief for the children of fallen troops who receive survivor benefits.
S. 1370 was co-sponsored by more than 40 senators and was originally introduced this month by Sen. Bill Cassidy, R-La. It received the support of Republican and Democrat leaders and passed the Senate by unanimous consent on Tuesday.
If similar legislation is passed by the House, the bill would amend a special tax that was created in 1986 as a means of stopping wealthy parents from sheltering income by shifting it to their children. That tax inadvertently creates higher taxes on military survivor benefits.
The bill would exempt those benefits from the additional tax by instructing the IRS to treat the benefits as earned income.
“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,” Cassidy said. “I thank Democratic colleagues for joining to improve the law and ensure more Americans benefit.”
Sen. Doug Jones, D-Ala., said significantly raising taxes on the children’s benefits earned by the sacrifice of a parent is unconscionable. He called the legislation “a first step toward honoring our commitment and making these families whole financially.”
Other supporters of the bill include Sen. Johnny Isakson, R-Ga., the chair of the Senate Veterans Affairs Committee; and Sen. Jon Tester, D-Mont., the ranking member of that committee.