Military DIsability Retirement taxable?

user17611583623 — Wed, 22 Oct 2025 18:44:17 GMT

Hi All,

I have a military retirement based on 100% disability according to my retirement order. Yet I have been paying taxes on this retirement for some time now according to the experts. It is not from combat injuries. Should this retirement be taxable? I understand that VA monies are not taxed. If it is taxable what do you recommend for reducing the taxes since I can't use any of the retirement income to contribute to an IRA?

Thank you.

Re: Military DIsability Retirement taxable?

KusyJ — Wed, 22 Oct 2025 19:10:55 GMT

Military retirement pay based upon years of service is taxable by the federal government.

Disability payments from Veterans Affairs based on disability rating is nontaxable.

According to the Defense Finance and Accounting Service, “If you retired under a disability law (Temporary Disability Retirement List or Permanent Disability Retirement List), your retired pay will be fully non-taxable if your pay is calculated based upon your military (not VA) disability percentage and you meet one of the following conditions:”

You were in the military on September 24, 1975 or
Your military rating is combat-related.

Based on the DFAS explanation and the information you provided in your question, it appears your military retirement income is taxable.

If your military retirement income allows you to earn income, you could then take advantage of contributions to a traditional IRA as long as your combined work income and military retirement income does not exceed the phase out level for your filing status.

In 2024 the credit phases out at $76,500 for Married filing Join and $38,250 for filing single.

If you own a home, you can itemize your deductions using mortgage interest, property taxes, state income taxes paid and charitable contributions as well as medical expenses above 7.5% of your adjusted gross income. If those amounts added up exceed the standard deduction, your tax liability will be reduced.

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Military DIsability Retirement taxable?

Re: Military DIsability Retirement taxable?