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Tax Tip Tuesday: Serving and Saving: Tax Benefits Every U.S. Veteran Should Know

  • Writer: May Sung
    May Sung
  • Nov 11
  • 2 min read

Every Veterans Day, we take a moment to honor those who’ve served — and at MKHS Tax Group, we also want to help them make the most of the tax benefits they’ve earned. Whether you’re retired, transitioning out of active duty, or still serving, there are important federal and state tax provisions designed to support veterans and their families.


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1. Military Pay and Disability Benefits


Certain types of military pay are excluded from taxable income, including combat pay, some allowances, and most VA disability benefits. These exclusions help reduce taxable income and ensure that service-related benefits aren’t taxed twice.


2. Education and Training Credits


Veterans using the GI Bill or Vocational Rehabilitation and Employment (VR&E) program may also qualify for education credits such as the Lifetime Learning Credit if they have out-of-pocket tuition expenses. Even if you receive partial funding through VA benefits, it’s worth reviewing your eligibility for these credits.


3. Property Tax Exemptions


Many states offer property tax reductions or full exemptions for veterans — especially those with service-connected disabilities. Rules vary by state, but these savings can significantly reduce annual home ownership costs.


4. Retirement Pay and State Rules


Military retirement pay may be fully or partially exempt from state income tax depending on where you live. Some states exclude all military retirement income, while others offer capped deductions. It’s important to review your state’s current veteran tax laws to ensure you’re not missing out.


5. Filing Tips and Common Misses


  • Keep copies of all VA and DFAS statements for tax prep.

  • Check if your state offers veteran-specific credits or exemptions.

  • If you received a retroactive disability determination, you may be able to amend prior returns for refunds.


Our veterans have given their time, energy, and service — they deserve every benefit available to them. Whether you’re filing as a veteran, a military spouse, or a retiree, taking advantage of these provisions can make a real financial difference.

If you’re unsure which benefits apply to you or need help filing correctly, reach out to info@mkhstaxgroup.com

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