Disability benefits
Some income from military service related disability is not taxable.
Title II of the Social Security Act authorizes payment of monthly federal Disability Insurance (OASDI) benefits. These benefits paid by the Social Security Administration are taxable. OASDI benefits are paid to persons who have contributed to the social security system through payroll deductions or self-employment taxes through their working years. The benefits commence upon departure from the work force on account of disability.
Supplemental Security Income (SSI) payments are exempt from tax. They are paid on the basis of need and supplement OASDI benefits.