Is My VA Disability Taxable?

If you’ve filed a claim for or have been awarded VA disability benefits, you may be wondering whether you’ll have to pay taxes on that income. If you already receive disability benefits, you may be unsure how to report them on your 2024 taxes.

Fortunately, you don’t have to worry about taxes on your VA disability benefits. Monetary VA disability benefits don’t count for federal income taxes. In fact, if VA disability is your only income, you don’t even have to file a tax return. If you do file a tax return for another reason, you can simply leave off your VA disability pay. The VA won’t withhold taxes from your benefits and won’t issue you a 1099.

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Many Other VA Disability are Also Untaxed

As a disabled veteran, you may receive benefits other than your monthly monetary benefits. Fortunately, most of those benefits are also disregarded for income tax purposes. For example:

Educational benefits for veterans are not considered taxable income
Combat-related special compensation (CRSC) is not taxable
Grants for wheelchair-accessible housing are not taxable
Compensated work therapy payments are not taxable
Grants for automobiles or adaptive equipment are not taxable

Some benefits for dependents and surviving dependents of veterans are also non-taxable, such as Dependency and Indemnity Compensation (DIC).

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Other Benefits for Veterans

It’s important to note that other benefits a disabled veteran receives may be treated differently. For example, Social Security retirement benefits and disability benefits are both taxable above a certain level. And, some grants or other benefits received from state or local governments or non-profit entities may be subject to income tax. The agency or department you are working with to receive those types of benefits can tell you what to expect before you accept the benefits.

You can also find more information in IRS Publication 525, Taxable and Nontaxable Income. Note that this version is for preparing your 2024 taxes. Always make sure you are using the most current version.

VA Disability and Earned Income Credit

VA disability doesn’t count as earned income, but a veteran who receives disability benefits and also has earned income may qualify for the earned income tax credit.

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The Bottom Line on VA Disability and Taxes

VA disability monetary benefits and many other types of benefits are not taxable as income. If you’re considering filing a claim for VA disability or need to appeal a denial or low disability rating, this is probably just one of many questions you have. An experienced VA disability benefits advocate at Disabled Vets can help. Call us today at 888-373-4722 or fill out our contact form here.

Call 1-888-373-4722 or complete a Free Case Evaluation form