The "Disabled Veterans Tax Termination Act" allows military retirees with any service-connected disability to receive both retired pay and veterans' disability compensation concurrently, and updates related sections of the U.S. Code to reflect these changes.
Sanford Bishop
Representative
GA-2
The "Disabled Veterans Tax Termination Act" amends Title 10 of the United States Code to allow military retirees with any service-connected disability to receive both retired pay and veterans' disability compensation concurrently, eliminating the previous disability rating requirement. It adjusts how disability retirees with fewer than 20 years of service have their retired pay reduced and updates references and headings to reflect these changes. These amendments will take effect the first day of the month following the enactment of this Act, applying to payments for subsequent months.
Disabled Veterans Tax Termination Act: No More 50% Disability Rule for Concurrent Benefits, Starting Next Month
The "Disabled Veterans Tax Termination Act" makes a significant change for military retirees with service-connected disabilities. This bill eliminates the requirement that veterans have a disability rating of 50% or higher to receive both their retired pay and their VA disability compensation. Previously, only those with a 50% or greater rating qualified for both. This change opens up concurrent benefits to a wider range of disabled veterans.
Cash and Compensation
The core change is in Section 2, which amends Section 1414(a) of Title 10 of the U.S. Code. It's a mouthful of numbers, but it boils down to this: if you're a military retiree with any service-connected disability, you can now get both your retirement pay and your VA disability compensation. No more choosing one or the other, and no more needing a 50% disability rating to qualify. For example, a veteran with a 30% disability rating, previously ineligible for full concurrent receipt, will now receive both payments in full. The bill also cleans up some old language related to a phase-in period that's already over (Section 2, removing outdated clauses in Section 1414).
For those with fewer than 20 years of service, the bill clarifies how retired pay is calculated if you're also receiving disability (Section 1414(b)). It involves a formula based on your years of service and your retired pay base, ensuring that any reduction in retired pay is precisely calculated, and only by the amount exceeding 2 percent of their years of creditable service times their retired pay base.
Real-World Rollout
This change kicks in fast. The new rules take effect on the first day of the month following the bill's enactment. So, if the bill is signed into law in July, the changes start on August 1st. And it applies to payments for months starting on or after that date. The bill also updates section headings to make things clearer (Section 2, updating the heading of Section 1414). For instance, Section 1413a(f) gets a minor tweak to fix a reference.
Potential Pitfalls
While the intent is to simplify and expand benefits, the calculations for those with less than 20 years of service could get tricky. The bill aims for a precise calculation, but precise can also mean complex, and there's always a risk of misapplication in complex formulas.