VA disability compensation is completely tax-free at both federal and state levels. You don't report it on your tax return.

Up to 85% of your SSDI benefits may be taxable. That doesn’t mean you face an 85% tax rate on your disability income. Many, or all, of the products featured on this page are from our advertising ...

This includes medical expense and dismemberment and sight loss coverage for the employee, his or her spouse and dependents, and coverage providing for disability income for the employee ( Q 380).

Les Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, ...