The welcome letter you received from DFAS when you first retired indicates whether your pay is computed using your military percentage of disability or your years of service.
Military retirement pay based on age or length of service is considered taxable income for Federal income taxes. However, military disability retirement pay and Veterans' benefits, including service-connected disability pension payments, may be partially or fully excluded from taxable income.
Is your retirement pay based on length of service or is it military disability retirement pay?
