Q:

Are V.A. benefits taxable?

A:

Quick Answer

Veterans and their families do not pay tax on their benefits, states the U.S. Army. Pension and disability payments; funds for training, education and subsistence; grants for homes that accommodate wheelchairs; and grants for motor vehicles for veterans who have lost the use of an eye or limb are tax-exempt.

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Full Answer

Other nontaxable benefits that veterans and their families receive include proceeds and dividends from veterans' insurance and endowment policies paid before death and insurance dividend interest from Veterans Administration deposits, notes the U.S. Army. Death benefits to survivors of Armed Forces members who died after Sept. 10, 2001, and dependent-care assistance program benefits are also tax-free. The federal government does not impose taxes on bonuses that states or political subdivisions pay based on combat-zone service or on work therapy program compensation.

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