DIC and SBP Together: What the Widow’s Tax Repeal Changed for Survivors

For decades, military widows and widowers who qualified for both the Survivor Benefit Plan (SBP) annuity and VA Dependency and Indemnity Compensation (DIC) ran into a frustrating rule: receiving one reduced the other, dollar for dollar. That offset — commonly called the “widow’s tax” — is now gone, but understanding how we got here helps explain what survivors receive today and why some older guidance you might find online is out of date.

What the Offset Used to Require

Since 1972, federal law required a dollar-for-dollar reduction in SBP payments for every dollar of DIC a survivor received. Because DIC often came close to or exceeded the SBP annuity itself, many survivors who had paid into SBP for years saw little or none of that annuity actually paid out on top of their DIC. This affected tens of thousands of surviving military spouses over nearly five decades, with reported losses averaging in the hundreds of dollars per month for those affected.

How the Phase-Out Actually Worked

Congress passed the repeal in the National Defense Authorization Act for Fiscal Year 2020, but the offset wasn’t eliminated all at once. It phased out in thirds: no change in 2020, one-third of the offset SBP amount restored (on top of full DIC) starting February 2021, two-thirds restored starting 2022, and the offset fully eliminated starting February 2023. Since February 2023, eligible survivors receive their complete SBP annuity from DoD and their complete DIC from VA, with no reduction to either.

What Happened to the Special Survivor Indemnity Allowance

During the phase-out years, a Special Survivor Indemnity Allowance (SSIA) existed specifically to help offset the remaining reduction survivors were still experiencing while the full repeal was being phased in. Once the offset was fully eliminated in 2023, SSIA was no longer needed and payments under it stopped — so if you’re researching this topic and see SSIA mentioned as something currently payable, that information is outdated.

What Survivors Receive Today

As of the full 2023 elimination, qualifying survivors receive their entire SBP annuity (which is taxable income from DoD) and their entire DIC payment (which is nontaxable from VA) with no offset between them. This change was not retroactive — it doesn’t generate back payments for the years the offset reduced your SBP, and survivors who previously had SBP premiums refunded during an earlier phase of related reform do not need to repay those refunds. Because DIC rates adjust periodically with cost-of-living increases, check VA.gov directly for the current DIC payment rate rather than relying on a specific dollar figure from an older article.

If You Previously Elected the Child-Only SBP Option

Some survivors, facing the old offset, had elected a child-only SBP option instead of receiving the annuity in their own name, since DIC would have wiped out most or all of a spouse-designated annuity anyway. With the offset fully eliminated, affected survivors were given the opportunity to permanently re-elect SBP in their own name going forward. If this applied to you and you’re unsure whether you made that election, contact DFAS or your branch’s casualty assistance office to confirm your current SBP designation.

How Remarriage Affects DIC and SBP Separately

DIC and SBP are two completely different benefits, paid by two different agencies, and each one has its own separate remarriage rule — surviving spouses regularly assume that losing one automatically means losing the other, or that satisfying one program’s remarriage requirement covers both, and neither assumption holds up.

For DIC, VA generally terminates the benefit if the surviving spouse remarries before age 55. Remarriage at age 55 or later does not affect DIC eligibility at all under the current rule. If a remarriage that ended DIC later itself ends — through divorce, death of the new spouse, or annulment — DIC can be reinstated, so losing the benefit to an earlier remarriage is not necessarily permanent.

SBP runs on its own track through DFAS rather than VA, but lands on a very similar age-55 line: an SBP annuity generally stops if the surviving spouse remarries before turning 55, and remarriage at 55 or after does not interrupt the annuity. As with DIC, if that later marriage ends, SBP can be reinstated going forward. The two programs arriving at the same age threshold through completely separate regulations is exactly why people conflate them, but a DFAS decision about SBP has no authority over what VA does with DIC, and vice versa — each agency makes its own determination based on its own rule, so a change in one does not automatically trigger a change in the other.

Because the dollar amounts and the agencies involved differ, a remarriage decision can carry different financial stakes depending on which benefit is larger for your situation. If you are still working through the DIC application itself, our guide on VA Dependency and Indemnity Compensation for surviving spouses covers eligibility and the filing process in full.

Key Takeaways

• The SBP-DIC offset (“widow’s tax”) is fully eliminated as of February 2023 — survivors now receive both benefits in full, with no reduction.
• The elimination phased in over three years: one-third restored in 2021, two-thirds in 2022, full elimination in 2023.
• SSIA, which helped bridge the gap during the phase-out, ended once the offset was fully eliminated — it is not a current, ongoing payment.
• The change is not retroactive; it does not generate back pay for years when the offset was still in effect.
• Survivors who previously chose the child-only SBP option due to the old offset could permanently re-elect SBP in their own name starting in 2023.

Related Reading

If you’re newly navigating survivor benefits after a service-connected death, our guide on applying for VA Dependency and Indemnity Compensation covers the DIC application process itself.

FAQ

Do I need to do anything to receive both SBP and DIC in full now?
If you’re already receiving both benefits, the elimination should have been applied automatically starting with the February 2023 payment. If you believe your payments still reflect an offset, contact DFAS directly.

Can I get back pay for the years the offset reduced my SBP?
No — the elimination was not made retroactive, so there’s no mechanism for recovering the reduced amounts from before the full 2023 elimination.

Is SSIA still a payment I can apply for?
No. SSIA was a bridge payment during the phase-out years and ended once the offset was fully eliminated in 2023. If you see it referenced as current, that source is outdated.