VA Aid and Attendance benefits are not taxable. Federal law exempts every benefit administered by the Department of Veterans Affairs from income tax, and the IRS confirms that VA pension payments, including the Aid and Attendance supplement, stay out of gross income. For 2026, a single veteran qualifying for A&A can receive up to $29,093 per year tax-free; a veteran with one dependent can receive up to $34,488. The complications show up around the edges: medical expense deductions, one specific tax credit, other government benefits, and what happens when you use A&A money to hire a caregiver.
The Federal Rule
Two statutes do the work. Under 38 U.S.C. § 5301, all benefits paid under any law administered by the VA “shall be exempt from taxation.”1Office of the Law Revision Counsel. United States Code Title 38 – Section 5301 Under 26 U.S.C. § 104(a)(4), any pension or similar allowance for personal injuries or sickness resulting from active military service is excluded from gross income.2Office of the Law Revision Counsel. United States Code Title 26 – Section 104
IRS Publication 525 states the rule in plain language: “Don’t include in your income any veterans’ benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs.”3Internal Revenue Service. Publication 525, Taxable and Nontaxable Income That covers disability compensation, the basic VA pension, and the Aid and Attendance supplement equally. The exclusion applies to the entire payment regardless of your filing status, your other income, or how many dependents you claim.
A&A sits inside the VA’s needs-based pension program, so the payment equals the difference between your countable income and the Maximum Annual Pension Rate that Congress sets. Effective December 1, 2025, a 2.8% cost-of-living adjustment produced the current A&A rates:4Federal Register. Veterans and Survivors Pension and Parents Dependency and Indemnity Compensation Cost-of-Living Adjustments
- Veteran with no dependents: $29,093 per year
- Veteran with one dependent: $34,488 per year
- Each additional dependent adds $2,984
- Surviving spouse alone: $18,697 per year
- Surviving spouse with one child: $22,304 per year
Every dollar is excluded from federal gross income.5Veterans Affairs. Current Pension Rates for Veterans
How A&A Appears on Your Return
It doesn’t. Because the payments are excluded from gross income, the VA does not issue a Form 1099 or Form W-2 for them.6VA.gov. Tax Season Guidance for Veterans There is no line on Form 1040 for non-taxable VA pension benefits. You leave them off the return.
That has a practical consequence: A&A does not count toward the gross income threshold that decides whether you must file at all. A veteran whose only income is VA pension and A&A may have no federal filing requirement. Filing can still be worthwhile if you qualify for refundable credits or had federal tax withheld from other income during the year.
Keep your annual VA benefit summary letter with your tax records. You won’t attach it to the return, but it documents the non-taxable payments if the IRS ever asks about your income.
State Income Tax
Most states follow the federal treatment. Eight states impose no individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Washington taxes only capital gains income above $270,000, which doesn’t reach VA pension payments. Veterans in any of those nine states owe no state income tax on A&A.
Among states with an income tax, the large majority exclude VA benefits, either by conforming to the federal exclusion or through an explicit state exemption. A few require you to report VA benefits on the state return and then deduct or exempt them before tax is calculated. The result is the same, but the reporting step surprises people. If your state has an income tax, check the return instructions for a VA benefit line, or ask a preparer who works with veterans.
Medical Expense Deductions
Veterans who itemize can generally still claim qualifying medical expenses even when A&A funds paid for the care. IRS Publication 502 tells you to reduce deductible medical expenses by any reimbursement you received.7Internal Revenue Service. Publication 502, Medical and Dental Expenses The operative word is “reimbursement.” A&A is a pension, not a reimbursement. The VA does not calculate the amount from specific medical bills you submit; it pays a flat rate based on income, dependents, and care needs. Because A&A is not tied to particular expenses, it generally doesn’t trigger the reimbursement offset.
In practice, a veteran paying $3,000 a month for a home health aide can potentially deduct that cost on Schedule A, to the extent total medical expenses exceed 7.5% of adjusted gross income, without subtracting A&A. For veterans with high care costs and low taxable income from other sources, this can produce a real benefit. The intersection of non-taxable pension income and itemized medical deductions is a gray area, and professional advice usually pays for itself here.
The Credit for the Elderly or the Disabled
This is the one place where A&A’s non-taxable status works against you. The Credit for the Elderly or the Disabled, calculated on Schedule R, is reduced by non-taxable pensions, and VA pension payments including A&A fall into that category.8Internal Revenue Service. Instructions for Schedule R (Form 1040) Line 13b of Schedule R asks for the total veterans’ pensions you received during the year (other than military disability pensions for service-connected injuries). That figure directly reduces the base amount the credit is calculated on. For many A&A recipients, the pension alone is enough to wipe out the credit. Run the Schedule R worksheet before you count on it.
How A&A Affects Other Government Benefits
Non-taxable and non-countable are not the same thing. The IRS ignores A&A, but other programs apply their own rules, and the answers differ.
Supplemental Security Income
The Social Security Administration does not count the A&A portion of a VA pension as income for SSI. SSA’s policy manual is explicit: “VA aid and attendance (A&A) and housebound allowances (HBA) are not income.”9Social Security Administration. POMS SI 00830.302 – Veterans Affairs Pension Payments
The base pension portion is different. SSA treats it as unearned income based on need, and it does not qualify for the standard $20 monthly general income exclusion that applies to most other unearned income.10Social Security Administration. SSR 78-4 – Title XVI: Veterans Administration Pensions That means the base pension reduces SSI dollar for dollar, while the A&A supplement sits on top without further reducing your SSI check. Knowing which portion is which matters for budgeting.
Medicaid
Medicaid eligibility is governed by state rules, and this is the most treacherous area for veterans who need long-term care. While SSA excludes A&A from SSI income, most states count the entire VA pension, A&A included, when they measure Medicaid eligibility. Stacked on top of Social Security and any other income, A&A can push a veteran past a state’s Medicaid income threshold. In income-cap states, the usual fix is a Qualified Income Trust (a Miller Trust). Coordinating both benefits is complex enough that an accredited veterans benefits attorney or Medicaid planner is usually worth the fee.
Social Security Retirement and Disability
Regular Social Security retirement and SSDI benefits are based on your earnings history. Receiving A&A has no effect on the benefit amount or your eligibility.
HUD Housing Assistance
For Section 8 and other HUD programs, A&A payments are excluded from annual income under 24 CFR 5.609(b)(17).11HUD Exchange. Income and Income Exclusions Resource Sheet Retroactive lump-sum VA disability payments are also excluded. A&A will not raise your rent in subsidized housing.
SNAP
SNAP treats A&A less favorably. It counts as unearned income when determining SNAP eligibility and benefit levels because it is not on the statutory exclusion list. A household member who receives A&A does, however, meet SNAP’s definition of disabled, which unlocks a deduction for unreimbursed monthly medical expenses over $35. Claiming that deduction, using the very care costs A&A is meant to cover, can offset most or all of the income the benefit adds.
ACA Premium Tax Credits
Marketplace premium tax credits are based on Modified Adjusted Gross Income. Non-taxable VA benefits, including A&A and disability payments, are not part of MAGI.12HealthCare.gov. What’s Included as Income A&A will not reduce your premium tax credit.
Earned Income Tax Credit
VA benefits including A&A are not earned income for EITC purposes.13Internal Revenue Service. Disability and the Earned Income Tax Credit If you have qualifying earned income from other work, A&A will not inflate the income figure or disqualify you from the credit.
Hiring a Caregiver Can Create Tax Obligations
Most veterans use A&A to pay for in-home care, and this is where a tax-free benefit can quietly generate a tax filing duty. If you hire a private caregiver directly rather than going through an agency, the IRS may treat you as a household employer.
For 2026, the thresholds are:14Internal Revenue Service. Publication 926, Household Employer’s Tax Guide
- Social Security and Medicare taxes: if you pay a household caregiver $3,000 or more in cash wages in 2026, you owe FICA taxes totaling 15.3% of wages, half withheld from the caregiver and half paid by you.
- Federal unemployment (FUTA) tax: if you pay $1,000 or more in any calendar quarter, you owe FUTA on the first $7,000 of wages, typically at a 0.6% effective rate after credits, paid by you.
- Federal income tax withholding: not required for household employees unless the caregiver requests it and you agree.
- Reporting: file Schedule H with your Form 1040 by April 15, 2027, to report 2026 household employment taxes.
Going through a home care agency generally avoids all of this because the agency is the employer of record. Hiring someone directly, whether a family member, a neighbor, or someone found through word of mouth, puts the payroll obligation on you. The A&A payment remains tax-free in your hands, but the wages you pay from it carry their own tax rules, and penalties for skipping household employment taxes can be significant.