What Veterans Need to Know This Tax Season
As Americans prepare for this year’s April 15, 2026 tax filing deadline, we are reminded of the complicated landscape of tax season. Fortunately, for veterans, there are many VA benefits that help alleviate this burden. This article will detail some of those benefits, including tax credits, refund opportunities, and free tax filing programs. As always, it is important to discuss this information with your tax professional before filing.
Non-Taxable VA Benefits
The first question veterans might ask when preparing their tax filings this year is whether VA benefits are taxed.
The following VA benefits should NOT be included in the veteran’s gross income:
- VA disability compensation
- VA pension payments
- Veteran Readiness & Employment (VR&E) benefits
- GI Bill and other education benefits
These exclusions can significantly lower the veteran’s taxable income and may help the veteran qualify for additional credits.
Additionally, there is no federal income tax on VA insurance proceeds. However, veterans may want to check with a financial advisor regarding state taxes and potential estate tax implications.
Tax Credits and Refund Opportunities
Veterans may be eligible for several federal and state tax credits, depending on the veteran’s income, location, and family status.
· Earned Income Tax Credit (EITC)
If the veteran works and earns a moderate or low income, the EITC could reduce the amount of taxes the veteran owes, or even give the veteran a refund. The amount the veteran receives depends on the veteran’s income, filing status, and number of qualifying children, and many veterans qualify as taxpayers under special military rules. There are two additional rules for members of the military who claim the EITC if they received nontaxable military pay or were stationed outside the U.S. Learn more about this tax credit here.
· State and Local Tax Breaks
Some states offer additional benefits for veterans, such as property tax exemptions or income tax reductions. These vary widely, so check the state’s veteran tax benefits page. In 2025, the VA cataloged some of these state benefits, which can be found here.
· Retroactive VA Benefit Refunds
Veterans may be eligible to claim a federal tax refund based on an increase in their VA disability percentage (which may include a retroactive determination). Additionally, combat-disabled veterans who are granted Combat-Related Special Compensation after an award for Concurrent Retirement and Disability may be eligible to claim a federal tax refund.
Free Tax Assistance Programs
Free Tax Assistance Programs
Veterans have access to several free tax assistance programs; however, eligibility for these programs largely depends on the veteran’s location and income.
- IRS Free File:If a veteran’s adjusted gross income is $89,000 or less, the veteran can file electronically with an IRS Free File software provider. If their income is higher, the veteran can use Free File fillable forms.
- IRS Direct File:If a veteran lives in a participating state, they can use the free IRS Direct File service to e-file their federal tax return directly with IRS.
- In-person help: If a veteran’s adjusted income is $69,000 or less, if they have a disability and/or need language support, or if they are 60-years old or older, they can receive free in-person help from an IRS-certified volunteer via the Volunteer Income Tax Assistance (VITA) program.
- Military OneSource:The MilTax software and expert consultations are free for active-duty service members, eligible family members, survivors, and recent veterans up to one year from their separation or retirement date.
Important Tax Documents
To streamline filing, the veteran should collect:
- IRS Form W-2
- IRS Form 1099
- IRS Form 1095-B, which shows the veteran had health coverage during the year. The IRS no longer requires this form for federal tax filing, but the veteran can still request a copy from the VA electronically through the veteran’s VA.gov account. The veteran or a family membercan also request a paper copy by calling 877-222-VETS (8387), Monday through Friday, 8 a.m. to 8 p.m. ET.
- Records of any civilian employment
- Records of any military employment that was overseas and/or not taxable
- Documentation of deductible expenses
- VA benefit statements (for reference, even if nontaxable)
Avoid Tax Season Scams
Veterans are often targeted by scammers during tax season due to their access to government resources and VA disability benefit payments. Veterans must protect their personal and financial information to avoid falling victim to scammers. Veterans should stay alert for:
- Fake IRS calls demanding immediate payment or personal information
- Phishing emails requesting payments or personal information
- Fraudulent “tax preparers” promising inflated refunds
Check out this website for more information on tax scams the IRS is tracking. If you are aware of a tax fraud or scam, you can report it by visiting the VSAFE website, calling the cross-federal VSAFE call line at 833-38V-SAFE (8-7233), or by visiting the IRS reporting webpage.
It is important to use trusted resources and work only with certified tax professionals or verified free prep programs during this tax season.
Vets National Can Help!
At Vets National, we’re committed to supporting veterans in navigating the complexities of VA disability benefit appeals. Contact us today, at 877-777-4021, to learn more about how we can assist you in appealing your denied VA claims and maximizing your VA benefits.
