VA Disability Tax Rules in California

VA disability compensation is tax-free at the federal level. California has a state income tax, but VA disability compensation itself is generally not taxed as income.

California income tax treatment

• California levies a personal income tax.
• VA disability compensation is federally excluded from taxable income and is generally not taxed by California.
• If you have mixed military income (retired pay, pensions, wages), confirm treatment with the California Franchise Tax Board.

Property tax exemptions for disabled veterans in California

California provides a Disabled Veterans’ Exemption for a qualifying primary residence.

• Available to qualifying veterans with a 100% service-connected disability (including certain unemployability determinations) and eligible surviving spouses.
• California has a basic exemption and a higher low-income exemption.
• Exemption amounts are indexed and updated by the state each year.

Apply through your county assessor.

Other veteran-related tax benefits in California

• California has veteran-related vehicle registration and fee programs in specific cases.
• Additional local programs may exist by county.

If your situation involves special assessments or local district taxes, check with your county assessor or California Department of Tax and Fee Administration.

Track your VA income and net worth in one place

Nova helps you track your full financial picture—including VA disability compensation—so you can monitor progress even when tax rules differ by income type.

Related reading

• VA disability compensation: tax-free income and your net worth
• Military to civilian financial transition
• How to calculate net worth