This is a very interesting thread minus a very important bit of information.
The words compensation have been used in more than one comment.
I freely admit I don’t know the percentage of disability that might have a compensation number attached to it, or if that number is 100% and your retirement package would then come under the VA disability program.
The reason I bring it up is my 30 percent rating has no compensation attached to it. I am an Air Force O-4 retiree. I receive no dollar amount as compensation. If I understand correctly the VA recognizes a portion of my retirement compensation from their system as tax free. My overall retired pay remains the calculated amount anyone of my retired rank would receive except that a portion subject to my disability rating would be tax free.
I believe the total is approximately 400 dollars a month which would amount to 4800 a year tax free. I don’t have a tax book handy but that benefit would be somewhere between 15 and 20 percent of 4800. That benefit is one reason I still choose to work and pay taxes. So all that tax burden is not on the shoulders of the producers while I am still able at eighty three.
My understanding is your retirement pay does not change and you do not get 30% disability pay. Instead, that 30% number transitions to your retirement pay and that amount becomes tax free, rather than taxed as your pension is.
So in general it reduces the taxes on your retirement pay. Rather than add it to your monthly payment.