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🏛️Washington D.C. · Tax Benefits

Military Disability Retirement Pay -- DC Income Tax Exclusion

Military disability retirement pay and VA disability compensation are excluded from DC taxable income.

Available to any veteran

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About this benefit

Eligibility

Any veteran receiving VA disability compensation or military disability retirement pay.

Covers

Military disability retirement pay received as a pension, annuity, or similar allowance for personal injury or sickness from active service is excluded from DC taxable income. DC income tax rates range from 4% to 10.75%.

Note

Regular (non-disability) military retirement pay IS fully taxable in DC, with only a limited $3,000 exemption for those age 62+.

How to apply

Claimed on your DC individual income tax return (Form D-40).

Verified against official source

Last checked 2026-05-06 against myarmybenefits.us.army.mil. Always confirm current rates and rules with the Washington D.C. state agency before applying.

Other Washington D.C. Tax Benefits

Disabled Veterans Homestead Deduction (Property Tax)

Up to $445,000 deducted from assessed home value for property tax purposes for 100% disabled veterans meeting income requirements.

~$4,250/year at DC tax rates

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