Exclusion of veterans' disability compensation
Disability compensation paid to veterans is not subject to federal income tax.
JCT line: "Exclusion of veterans' disability compensation". Rises to $22.5B by FY2029 as the compensated population grows.
Eligibility turns on a service-connected disability rating rather than on income or assets, and payment scales with the severity of the disability. There is no phase-out at the top, but the population is defined by injury rather than by wealth, which makes this among the least concentrated items in the dataset.
Structural reading
Included because the site's selection rule is size, and at $19.2B this is larger than several provisions already listed. It is also a useful calibration point at the low-concentration end. The eligibility gate is a disability rating rather than an income threshold or an asset position, which is a different axis from almost everything else here, and it produces a distribution that does not run upward in the usual way. The one structural qualification worth stating is that an exclusion is inherently worth more to a recipient who has other income to shelter, so even a benefit targeted by injury delivers unequal value across the population receiving it.
Who gets it
The channels the benefit actually flows through, described by asset position, entity form and form of return. Never by named individuals.
Cost split by the concentration score. That score is a judgement rather than a published figure, so treat this as the scale of the split, not an audited allocation.
- Veterans with a service-connected disability rating
The benefit is a function of the disability rating assigned by the Department of Veterans Affairs, so it tracks injury severity rather than income, assets or entity form.
- Higher-rated recipients with other taxable income
An exclusion is worth more to a recipient who has other income to shelter, so its value is larger for veterans with substantial civilian earnings or pensions than for those with little other income.
Who pays
General taxpayers.
This transfer follows a general pattern, asymmetric organisation, sustained expert attention, and scheduled expiry dates.
How rent-seeking works →Legislative history and accountability
Enacting statutes, major amendments, recorded votes with party breakdown, and live reform proposals.
Enabling legislation
- Exclusion of amounts received for service-connected injuryAug 16, 1954
Section 104(a)(4) of the 1954 Code excludes pensions, annuities and similar allowances for personal injuries or sickness resulting from active service in the armed forces, carrying forward a treatment that predates the codification.
BipartisanVeterans' compensation provisions have been enacted and expanded with support from both parties throughout the modern period. No separate roll call on this provision is recorded here.
Sources and data freshness
Published within the last year. Figures marked unverified are seed estimates that have not been reconciled line-by-line against the primary source document. See the methodology for how each score is constructed.