Is VA benefits disability income taxable income?

Disability income and certain benefits from the Department of Veterans Affairs is not taxable and should not be included as gross income on a recipient's tax return, says the Internal Revenue Service. This includes disability compensation and pension payments for disabilities that are paid to a veteran or his family.

Other VA benefits that are not considered taxable income include education, subsistence and training allowances, grants for homes designed for wheelchair accessibility and grants for special cars for veterans who lost their use of limbs or sight, says Nolo. Benefits paid under a dependent-care assistance program also are not taxable.