Virginia VA Disability 2027 COLA: Pay Chart & State Benefits

VA Disability Pay Raise in Virginia: 2027 COLA, State Tax Exemptions, and Property Tax Relief

Virginia veterans receiving VA disability compensation will see a 3.6% cost-of-living adjustment (COLA) in 2027, effective December 1, 2026. A veteran rated 100% disabled with no dependents will receive $4,080.37 per month. Virginia also exempts VA disability compensation from state income tax entirely and offers a full property tax exemption for 100% P&T disabled veterans on their primary residence.

Quick Facts: VA Disability Pay Raise in Virginia (2027)

2027 VA Disability COLA: What Virginia Veterans Will Receive

The 2027 VA disability COLA is 3.6%. This is the annual cost-of-living adjustment applied to VA disability compensation, Special Monthly Compensation (SMC), Dependency and Indemnity Compensation (DIC), and VA pension benefits. The increase takes effect December 1, 2026, and the first payment at the new rates arrives December 31, 2026.

The 3.6% increase is higher than the 2.8% COLA in 2026 and the 2.5% COLA in 2025. It is the largest increase since 2023, when benefits rose 8.7%.

2027 VA Disability Pay Chart — Veteran Alone (No Dependents)

Note: Veterans with dependents (spouse, children, or dependent parents) receive higher rates. A veteran rated 100% with a spouse and one child will receive approximately $4,474.47 per month in 2027.

2027 VA Disability Rates for Veterans with Dependents

2027 Special Monthly Compensation (SMC) Rates

Special Monthly Compensation is a higher rate paid to veterans with severe disabilities, including loss of limbs, blindness, or the need for aid and attendance. SMC rates also increase by 3.6% in 2027. For a 100% disabled veteran receiving SMC, the increase may range from $176.43 to $405.75 per month depending on the benefit level.

2027 VA Disability Payment Dates

VA disability compensation is paid on the first business day of each month, covering benefits for the previous month. When the first falls on a weekend or federal holiday, payment arrives on the last business day of the preceding month.

Complete 2027 VA Disability Payment Schedule

In April, July, and December 2027, veterans will receive two VA disability deposits in the same month due to weekend and holiday adjustments. The early deposit is not extra compensation — it is the next regular payment arriving ahead of schedule.

Virginia State Income Tax on VA Disability Benefits

Virginia does not tax VA disability compensation. VA disability benefits are exempt from Virginia state income tax entirely, regardless of the veteran’s disability rating or total income.

This is a significant benefit compared to some other states. Virginia joins all 50 states in exempting VA disability compensation from state income tax. However, Virginia does tax certain other military-related income, with specific exemptions.

Virginia Military Retirement Subtraction

Virginia offers a military benefits subtraction that allows eligible veterans to subtract up to $40,000 of military retirement income from their Virginia taxable income. This subtraction applies to military retirement pay, Survivor Benefit Plan payments, and certain other military benefits.

Starting January 1, 2027, HB47 expands this subtraction to include retirement income of uniformed service members and allows up to $40,000 of United States Foreign Service member retirement benefits to be subtracted as well.

Important distinction: The military retirement subtraction applies to military retired pay — not VA disability compensation. VA disability compensation is already tax-free in Virginia and does not need to be subtracted because it was never included as taxable income in the first place. Dependency and Indemnity Compensation (DIC) is also not included as income on Virginia tax returns.

Who Qualifies for the Military Retirement Subtraction

• Veterans receiving military retirement pay from the Armed Forces

• Surviving spouses receiving Survivor Benefit Plan payments

• Surviving spouses receiving certain military benefits

• Veterans receiving qualified military benefits under the Internal Revenue Code

There is no age limitation for the subtraction as of tax year 2024.

Virginia Property Tax Exemption for 100% Disabled Veterans

Virginia offers a full real property tax exemption on the primary residence of veterans rated 100% service-connected, permanent, and total disabled. The exemption applies without any income or asset limits.

Key Details of the Virginia Property Tax Exemption

How to Apply for the Virginia Property Tax Exemption

1. Obtain your VA benefits letter. Request a summary of benefits letter from VA showing your 100% service-connected, permanent, and total disability rating. You can request this by submitting VA Form 21-4138 to your VA regional office.

2. Contact your local Commissioner of the Revenue. Applications are filed with the local assessing official in your city or county — not with the state.

3. Complete the application. Each locality provides its own form. You will need to provide your VA benefits letter and proof of property ownership.

4. Submit before the deadline. Deadlines vary by locality. Contact your Commissioner of the Revenue for specific dates.

5. Renew as required. Some localities require periodic renewal. Check with your local office.

Surviving Spouse Eligibility

The surviving spouse of a veteran who was eligible for the property tax exemption also qualifies, provided the veteran’s death occurred on or after January 1, 2011, and the surviving spouse does not remarry. The exemption applies even if the spouse moves to a different principal residence.

Personal Property Tax Exemption

Virginia also offers a personal property tax exemption on one motor vehicle for veterans with a 100% service-connected disability. This exemption applies to one vehicle owned and used primarily by or for the veteran.

Who Qualifies for Virginia Veterans Benefits

Virginia veterans benefits are available to veterans, active-duty service members, National Guard members, reservists, and their families who meet specific eligibility criteria.

General Eligibility Requirements

• Veteran status: Honorable discharge from active duty

• Residency: Virginia resident at the time of application

• Disability rating: Specific ratings required for certain benefits (e.g., 100% P&T for property tax exemption)

• Service connection: Disability must be service-connected for VA disability compensation

Virginia Residency Requirement

Most Virginia state veterans benefits require Virginia residency. However, the property tax exemption applies to the veteran’s primary residence in Virginia, regardless of where the veteran previously lived.

Other Virginia Veterans Benefits

Virginia offers a range of additional benefits beyond tax exemptions.

Virginia Military Survivors and Dependents Education Program (VMSDEP)

VMSDEP provides educational assistance for up to 8 semesters of tuition and fees for dependents of veterans who died in the line of duty or are at least 90% permanently disabled due to military service.

Virginia Veterans Care Centers

The state operates veterans care centers providing long-term care for veterans who require skilled nursing or rehabilitation. To qualify, veterans must have been honorably discharged, be Virginia residents at the time of admission, and need skilled nursing care as determined by a physician.

How to Apply for Virginia Veterans Benefits

Step 1: Determine Which Benefits You Qualify For

Use this decision tree:

• 100% P&T disabled veteran? → Apply for property tax exemption and personal property tax exemption

• Military retiree? → Claim the $40,000 military retirement subtraction on your Virginia tax return

• Veteran with dependents? → Explore VMSDEP and in-state tuition benefits

• All veterans → VA disability compensation is automatically tax-free in Virginia

Step 2: Gather Required Documents

Step 3: Apply

• Property Tax Exemption: Contact your local Commissioner of the Revenue

• Military Retirement Subtraction: Claim on your Virginia individual income tax return

• VMSDEP: Apply through the Virginia Department of Veterans Services

• In-State Tuition: Apply through the college or university

Common Mistakes Virginia Veterans Make

Latest Rule Changes Affecting Virginia Veterans in 2027

HB47 Expansion

Virginia HB47, effective for taxable years beginning on or after January 1, 2027, expands the military retirement income tax subtraction to include retirement income of uniformed service members and allows up to $40,000 of United States Foreign Service member retirement benefits to be subtracted.

Property Tax Exemption Workgroup

The Virginia General Assembly established a workgroup to review the cost of mandatory property tax exemptions for disabled veterans and their spouses and make recommendations to ensure the sustainability of the exemption programs.

Federal COLA

The 3.6% federal COLA for 2027 applies automatically to all VA disability compensation, SMC, DIC, and VA pension benefits. No application is required.

Common Questions

How much will Virginia veterans receive from the 2027 VA disability COLA?

The 2027 COLA is 3.6%. A veteran rated 100% disabled with no dependents will receive $4,080.37 per month, up from $3,938.58 in 2026. A veteran rated 10% will receive $186.92 per month. The increase is automatic and requires no action.

Does Virginia tax VA disability compensation?

No. Virginia does not tax VA disability compensation at all. It is exempt from Virginia state income tax regardless of your disability rating or total income. This is separate from the military retirement subtraction, which applies to military retired pay.

What is the Virginia military retirement subtraction?

Virginia allows eligible veterans to subtract up to $40,000 of military retirement income from their Virginia taxable income. This applies to military retired pay and Survivor Benefit Plan payments. It does not apply to VA disability compensation, which is already tax-free.

Who qualifies for the Virginia property tax exemption?

Veterans rated 100% service-connected, permanent, and total disabled (including TDIU) qualify for a full property tax exemption on their primary residence. Surviving spouses who do not remarry also qualify if the veteran died on or after January 1, 2011. There are no income or asset limits.

How do I apply for the Virginia property tax exemption?

File an application with your local Commissioner of the Revenue or assessing official. You will need a VA summary of benefits letter showing your 100% P&T rating and proof of property ownership. Contact your local office for the specific form and deadline.

Does the 2027 COLA apply to Virginia state benefits?

No. The federal COLA applies only to federal VA benefits. Virginia state benefits, such as the property tax exemption and military retirement subtraction, have their own rules and amounts set by the Virginia General Assembly.

What is the difference between VA disability and military retirement for Virginia taxes?

VA disability compensation is never taxed in Virginia. Military retirement pay is taxable in Virginia but qualifies for a subtraction of up to $40,000. Veterans who receive both benefits should claim the subtraction on their military retirement pay while VA disability remains tax-free.

Can I receive the Virginia property tax exemption and the military retirement subtraction at the same time?

Yes. The property tax exemption applies to your primary residence, while the military retirement subtraction applies to your state income tax return. These are separate benefits, and eligible veterans can claim both.

What happens if I don’t apply for the property tax exemption?

You will continue paying property taxes on your primary residence. Virginia does not automatically apply the exemption. You must apply through your local Commissioner of the Revenue. The exemption begins on the date of your 100% P&T rating or the date you acquire the property, whichever is later.

Are there Virginia state benefits for veterans with ratings below 100%?

Yes. Veterans with ratings below 100% can still access in-state tuition, employment assistance, hunting and fishing license privileges, and VA disability compensation (which is tax-free in Virginia). The property tax exemption is limited to 100% P&T or TDIU veterans.

How does the 2027 COLA compare to previous years for Virginia veterans?

The 3.6% increase for 2027 is higher than the 2.8% increase in 2026 and the 2.5% increase in 2025. It is the largest increase since 2023, when benefits rose 8.7% due to peak inflation.

Key Takeaways

• 3.6% COLA for 2027: Virginia veterans receiving VA disability compensation will see a 3.6% increase effective December 1, 2026, with the first payment on December 31, 2026.

• 100% rating rate: A veteran rated 100% disabled with no dependents will receive $4,080.37 per month in 2027.

• Virginia does not tax VA disability: VA disability compensation is exempt from Virginia state income tax entirely.

• Military retirement subtraction: Virginia allows up to $40,000 of military retirement income to be subtracted from state taxable income.

• Property tax exemption: 100% P&T disabled veterans qualify for a full property tax exemption on their primary residence, with no income or asset limits.

• Surviving spouses qualify: Surviving spouses who do not remarry can inherit the property tax exemption.

• Apply locally: Property tax exemption applications are filed with your local Commissioner of the Revenue, not with the state.

• HB47 expands subtraction: Effective January 1, 2027, the military retirement subtraction expands to include uniformed service members and Foreign Service retirees.

• No action needed for COLA: The 2027 COLA is automatic. Veterans do not need to apply or submit paperwork.

• Additional benefits available: Virginia offers in-state tuition, VMSDEP, veterans care centers, and vehicle tax exemptions.

Official Resources

• VA Disability Compensation: VA.gov/disability/compensation-rates

• Virginia Department of Veterans Services: DVS.Virginia.gov

• Virginia Tax — Military Benefits Subtraction: Tax.Virginia.gov

• Virginia Code § 58.1-3219.5: Law.LIS.Virginia.gov

• Social Security COLA Information: SSA.gov/cola

• USA.gov Veterans Benefits: USA.gov/veterans-benefits