A coalition of leading military and veterans groups is urging Congress to end the wounded veteran tax.
Currently, veterans forced to medically retire before 20 years of service due to combat or combat-related injuries do not receive their full military retirement pay from the Department of Defense and their full disability compensation from the Department of Veterans Affairs. Their retirement pay is decreased – dollar for dollar – by the amount of their disability compensation, resulting in some veterans receiving no retirement benefits.
In a letter signed by 53 organizations, the coalition called on members of Congress to cosponsor the Major Richard Star Act, which would allow wounded veterans to keep the full military benefits they have earned through their service and sacrifice.
“These veterans are effectively getting taxed because they were injured while serving their country,” said Jose Ramos, vice president of Government and Community Relations for Wounded Warrior Project. “They may have significant combat injuries, lost limbs, or suffer from post-traumatic stress disorder or brain injuries, and they need the benefits they earned as they abruptly transition out of the military and try to restart their career.
"Yet, at the time when they need their country’s support the most, we tell them that they must suffer again – this time financially, as the government taxes them for being injured. Congress must end this injustice and pass the Major Richard Star Act now.”
The bill was introduced by Sens. Richard Blumenthal (D-CT), Mike Crapo (R-ID), Rick Scott (R-FL), and Elizabeth Warren (D-MA), along with Reps. Gus Bilirakis (R-FL-12) and Raul Ruiz (D-CA-25). While it received immense support in the last Congress, with 326 cosponsors in the House and 74 cosponsors in the Senate. However, it was not considered for a vote.
In the letter, the coalition calls on Congress to pass the bill as stand-alone legislation or ensure it is included in the Fiscal Year 2026 National Defense Authorization Act.
“There is no good reason the Major Richard Star Act should not pass Congress this year,” continued Ramos. “We have an obligation to keep our promise to those who served and sacrificed for us.”
The coalition also stressed that Congress established the two benefits for entirely different reasons – DoD retirement pay recognizes years of service while VA disability compensation reflects the impact of injuries suffered.
It is estimated that 50,000 wounded veterans are being negatively impacted by the tax.
Reach Julia LeDoux at Julia@connectingvets.com.