May 2005 - Disability compensation is a monetary benefit paid to veterans who are disabled by injury or disease incurred or aggravated during active military service.

The service of the veteran must have been terminated through separation or discharge under conditions that were other than dishonorable. Disability compensation varies with the degree of disability and the number of dependents, and is paid monthly. The benefits are not subject to federal or state income tax.

The payment of military retirement pay, disability severance pay and separation incentive payments known as SSB and VSI (Special Separation Benefits and Voluntary Separation Incentives) also affects the amount of VA compensation paid. See the "Tables" section of this booklet for more information.