Is VA Disability Pay Tax-Free? What the IRS and VA Say
Yes. The IRS says not to include VA disability benefits in your gross income. VA.gov calls VA disability compensation a monthly tax-free payment. Federal law, 38 U.S.C. 5301, says VA benefit payments are exempt from taxation.
Official sources checked October 17, 2026.
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What the official sources say
Here is what each official source says, in its own words where we can:
IRS Publication 907: "Don't include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income."
IRS Publication 525: don't include in your income veterans' benefits paid under any law VA administers. That includes disability compensation and pension payments for disabilities, paid to veterans or their families.
VA.gov: VA disability compensation offers a monthly tax-free payment.
38 U.S.C. 5301: payments of VA benefits "shall be exempt from taxation."
Military retired pay is different
VA disability pay and military retired pay are not the same thing. DFAS says CRDP is taxed the same way as your retired pay. DFAS says CRSC is non-taxable.
If you are a military retiree and your disability pay does not come from VA, IRS Publication 907 points you to Publication 525.
Ask a tax professional
This page only repeats what the IRS, VA, and federal law say. Your own taxes can depend on other income and other rules.
This page is not tax advice. Ask a tax professional about your own situation.
Common questions
Is VA disability pay taxable?
No. The IRS says not to include VA disability benefits in your gross income.
Is CRDP tax-free too?
Usually not. DFAS says CRDP is taxed the same way as your retired pay, and it is normally considered taxable income.
Is this tax advice?
This page is not tax advice. Ask a tax professional about your own situation.
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