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Mortgages for Veterans

Combat-Injured Veterans Tax Fairness Act of 2016

Wednesday, February 1, 2017 - Article by: Mortgages for Veterans - Mortgages for America - Message

Tax season is officially here and there is some good news for injured veterans. The "Combat-Injured Veterans Tax Fairness Act of 2016," a law that says Veterans injured in combat do not have to pay taxes on the lump-sum disability payments they received, goes into effect this year.

For Veterans who have already paid taxes on these payments, a refund is in your future. The law allows veterans to file amended tax returns and get refunds on any tax they paid on their disability disbursements from the Department of Defense (DOD). Estimates show more than 14,000 veterans paid $78 million in taxes that the IRS will refund.

The laws instructs the DOD to identify and reach out to veterans who paid these taxes so they may file an amended return and get their money back.

For more information on this refund, visit

Here are a few other important tax matters of which veterans should be aware:

  • Veterans and their families are entitled to free tax preparation services through a memorandum of understanding between the VA and IRS. The IRS collaborates with tax preparers across the country to provide this free service. For more information, visit
  • There are a number of tax benefits, such as credits, deductions and exemptions, that apply to veterans and active-duty servicemembers. However, each benefit has its own unique qualifications. To find out more about which tax benefits you are eligible for, visit
  • While many veteran benefits are tax exempt, not all are. A few benefit in which taxes will be owed include, but are not limited to, retirement pay, severance pay and health care.
  • Be prepared to show proof of your veteran status in order to receive these veteran tax benefits.

For more information on tax and other veteran benefits, join, a web site run by the U.S. Department of Veteran's Affairs and the Department of Defense.


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