Representatives John Carter (R-TX) and Rick Larsen (D-WA) yesterday introduced the Children of Fallen Warriors AMT Relief Act, legislation that would change tax law to count Survivor Benefit Plan annuity paid to a minor beneficiary as earned income, so the payments are not subject to the Alternative Minimum Tax.

“In the aftermath of a tragedy, the families of America’s fallen heroes should not be burdened with unjustly high taxes due to their loss,” Rep. Carter said. “The current tax system has unintendedly taxed some survivor’s benefits under the Alternative Minimum Tax rate. The AMT was meant for the ultra-wealthy, not for grieving military families. The men and women in uniform and their families sacrifice greatly for our nation, and we need to ensure that our laws are not placing an undue financial burden on a tragic situation.” 

“Survivor benefits are not unearned income. These children have endured sacrifice and loss,” said Larsen. “This bipartisan legislation will fix an injustice in the tax code so military families are not unfairly penalized.”

The Alternative Minimum Tax (AMT) was designed so that wealthy families can’t avoid paying taxes, but it’s had unintended consequences when it comes to families of fallen service members receiving annuities from the Uniformed Services Survivors Benefit Plan (SBP). In some cases, taxable SBP incomes can subject grieving families to the higher tax rates under AMT. Congressman Carter’s legislation would ensure that families of America’s fallen military would no longer have their survivor benefits taxed at AMT rates designed for the ultra-wealthy. 

Rep. Carter represents Texas District 31, which includes Fort Hood, the largest active duty armored military installation in the free world. He serves as co-chairman of the Congressional Army Caucus and Ranking Member of the Military Construction and Veterans Affairs Subcommittee on Appropriations.

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