What deductions or exclusions (medical expenses, dependents) can reduce countable income for VA means tests in 2025?
Executive summary
VA rules allow certain deductions and exclusions that lower “countable income” for means-tested VA programs in 2025: the VA will deduct unreimbursed medical, burial, and education expenses paid in the prior year and may exclude some types of income (for example, service‑connected disability pay is generally not counted for some programs) [1] [2] [3]. Official VA pages list the categories the agency counts as income and point applicants to case managers and Means Test guidance to identify deductible expenses [2] [1].
1. What the VA counts — and why the question matters
The VA computes “income for VA purposes” by adding wages, retirement and investment payments, Social Security, and other household income to determine eligibility for needs‑based benefits like pension and eligibility for certain health‑care priority groups; those categories and the geographic thresholds are published by VA and summarized in guidance documents [4] [5]. Understanding which amounts are counted matters because the VA subtracts allowable deductions from that total to generate the “countable income” that determines whether a veteran qualifies for pension or reduced copays [2] [6].
2. Medical expenses: the main deductible category
VA guidance and information bulletins state the VA deducts out‑of‑pocket, unreimbursed medical expenses paid in the prior calendar year when computing countable income for pension and means testing [1] [2]. The Internal Bulletin IB10‑439 explicitly lists reimbursed and non‑reimbursed deductible expenses to include medical costs, burial, and education expenses as deductible items that can lower countable income [1]. The VA web resource on income limits also says “we deduct these expenses from last year to lower the amount of money we count as your income” and directs applicants to case managers to help identify deductions [2].
3. Which income may be excluded entirely
Some types of payments are treated differently under VA rules. VA disability compensation and Dependency and Indemnity Compensation (DIC) are tax‑exempt and in many contexts are treated specially; separate VA documents and program guidance indicate that service‑connected disability income is often excluded from counting for certain programs or is treated under distinct rules — for example, SSVF guidance specifically addresses exclusion of service‑connected disability income [3] [7]. Official VA pension materials note that Social Security and other retirement payments are part of the income calculation, but Title 38 regulations and VA pages define exclusions and special treatments [7] [6].
4. Dependents and spouse income: partial exclusions and special rules
VA pension rules treat spouse and dependent income differently. For example, protected pension rules provide for partial exclusion of a spouse’s income (the VA notes “we won’t include the first $6,164 of your spouse’s yearly income” in certain historic protected‑rate calculations) and VA pension pages explicitly include dependent income among items the agency counts when setting the MAPR‑based pension amount [8] [6]. The specifics vary by program (pension vs. TDIU vs. health‑care means tests) and by whether the veteran is claiming protected status under older rules [8] [6].
5. Program differences: pension, TDIU, health care means tests
Rules are program‑specific. VA pension and Aid & Attendance use MAPR and explicit net‑worth and income tests with allowable deductions [6]. TDIU (Individual Unemployability) eligibility applies a strict personal‑income poverty threshold (reported as $15,650 for single persons in 2025) that focuses on the claimant’s own earned income rather than household income, so deduction and exclusion rules differ from pension calculations [9]. VA health‑care means tests and priority group income thresholds use geographically based income thresholds and allow deductions for last year’s qualifying expenses; applicants are advised by the VA to work with case managers to apply deductions correctly [2] [4].
6. Practical takeaway and where to get authoritative answers
The VA’s own resources (income limits and Means Test bulletins) are the authoritative starting point and specifically list deductible categories (medical, burial, education) and the income types counted (wages, retirement, Social Security, investment income) [2] [1] [4]. For questions about whether a given payment is excluded (for example, specific service‑connected payments, spouse income access issues, or how much of medical expenses are deductible), available sources direct veterans to VA case managers and cite the VA’s regulations and program guidance; current reporting does not provide a single, exhaustive checklist covering every nuance [2] [1] [3].
Limitations: This summary synthesizes the provided VA guidance and related documents; it does not replace consultation with a VA benefits officer or attorney. Available sources do not mention a comprehensive 2025 checklist of every deductible item across all VA programs — veterans should consult VA’s income limits pages and IB10‑439 for program‑specific rules and work with a VA case manager for application to individual circumstances [2] [1].