Virginia Democratic Rep. Elaine Luria, a retired naval commander, introduced a bill to reverse a tax hike on Gold Star Families caused by the Republican-backed Tax Cut and Jobs Act of 2017.
Republicans rushed to pass the tax overhaul legislation, leading to many unintended consequences. Among those is that families of deceased service members got stuck with higher tax bills in 2019. Luria’s bill is meant to counteract the tax hike, by changing the tax rate on survivor benefits given to children.
Those benefits used to be taxed at 12% to 15%. But after the 2017 law, the government began treating the Defense Department benefit like it were a trust or estate, leading to tax rates as high as 37%.
Luria’s bill, the Gold Star Family Tax Relief Act, would specify how these benefits should be taxed and would be retroactive, canceling out the significant tax increases that some families experienced.
“Gold Star Families have already paid the ultimate price, so it broke my heart when a surviving spouse from Coastal Virginia alerted me to this injustice,” Rep. Luria said. “I knew I had to fight for her in Congress to fix a broken system that should be working for her and her family.”
The bill has garnered bi-partisan support, including from Sen. Mark Warner (D-Virginia), who praised Luria’s bill.
Luria, a freshman lawmaker, has also introduced multiple other bills intended to help veterans and their families.
While advocates for military families support Luria’s bill, they view it only as a start and have also called on Congress to fundamentally change the way survivor benefits are distributed.