Bill to help Gold Star Families who paid thousands because of ‘Kiddie Tax’ passes Senate

Abbie Bennett
May 21, 2019 - 11:56 am
GoldStarFamily

DoD photo by EJ Hersom

Gold Star Families who faced thousands more in taxes this year because of the new “Kiddie Tax” could see relief if a bill that passed the Senate on Tuesday makes it through the House.

A bill sponsored by Sen. Doug Jones, D-Ala., the “Gold Star Families Tax Relief Act”, which would effectively overturn the Kiddie Tax for Gold Star Families, passed the Senate unanimously.

Since surviving spouses cannot receive the full amount of both Veterans Affairs benefits and Department of Defense benefits at the same time, many parents pass along their DoD benefits to children. But the Kiddie Tax taxed those benefits at a rate as high as 37 percent, nearly double the previous rate.

Previously, Gold Star Families were taxed closer to 12 or 15 percent but saw those rates rise to 37 percent, according to the Tragedy Assistance Program for Survivors.

A companion bill is also up for consideration in the House, sponsored by Rep. Elaine Luria, D-Va.

"The Gold Star Family Tax Relief Act" in the House would classify survivor benefits allocated to the child of a deceased service member or veteran as earned income, and therefore not subject to the Kiddie Tax. The bill, effectively, would “repeal” the tax hike passed as part of the 2017 tax law package, according to a news release from Luria’s office.

“Gold Star families have sacrificed so much for our nation, and passing this legislation to remove the exorbitant tax on surviving children’s benefits is the least we can do,” said Jones, a member of the Senate Armed Services Committee. “We can never truly thank these families enough for the sacrifices that they have made, but we can do everything in our power to honor and care for them.”

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