Are veterans disability benefits tax-free?

Yes, veterans disability benefits are tax-free in Washington. Disability benefits paid by the Department of Veterans Affairs (VA) are not subject to federal, state, or local income taxes. This tax-free benefit applies to all types of disability compensation, including disability pensions, Dependency and Indemnity Compensation (DIC), and Vocational Rehabilitation and Employment (VR&E). Disability benefits are not only tax-free, they are also excluded from Social Security benefits calculations. This means that, although your disability benefit is not taxable, it is not included in your Social Security benefits. However, if you receive a pension based on military service, or Social Security benefits or a lump-sum distribution of those benefits, these may be taxable. In addition to disability benefits, some other veterans benefits are also tax-free. Death benefits, such as Dependency and Indemnity Compensation (DIC), are not taxable. Disability benefits received as a service-connected veteran, or as a widow or widower of a deceased veteran, are also not taxable. Veterans Disability benefits provide much-needed financial support and are not subject to taxation. This important benefit helps disabled veterans and their families in Washington.

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Are veterans disability benefits tax-free?

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