The Impact of COLA on VA Disability Compensation

Every year, the Department of Veterans Affairs (VA) adjusts disability compensation rates to keep pace with inflation and the rising cost of living. These changes, known as Cost-of-Living Adjustments (COLA), are designed to help veterans maintain the purchasing power of their monthly benefits.

But what exactly is COLA, how is it determined, and what can you expect in the coming year? Let’s break it down.

What is COLA?

Is an annual increase applied to various government benefits — including Social Security and VA disability compensation — to account for inflation.

The Social Security Administration (SSA) calculates COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If the cost of goods and services increases, so does the COLA percentage, ensuring benefits rise accordingly.

How Does COLA Affect VA Disability Payments?

Once the SSA announces the annual COLA, the VA typically applies the same rate to disability compensation payments starting December 1st, with the new rate reflected in payments issued around January.

For example, there was a 2.5% COLA increase for 2025.  VA compensation increases by that same percentage. This increase helps cover rising costs in essentials like food, housing, and healthcare.

Why It Matters

Even a small COLA increase can make a meaningful difference over time — especially for veterans living on fixed incomes. As inflation affects the cost of daily essentials, this annual adjustment ensures your benefits don’t lose value.

• If you receive $1,000/month, a 2.5% increase would raise it to $1,025/month

• Higher disability ratings and additional dependent allowances will also increase proportionally.

It’s also important to note that COLA is applied automatically — you don’t need to take any action to receive it.

 Final Thoughts

COLA may not seem like a big change at first glance, but it plays a vital role in protecting your benefits against inflation. It’s one of the ways the VA system works to support veterans long-term.

If you're unsure whether you’re receiving the correct compensation — or if you believe your rating should be higher — we’re here to help. Give us a call today at 1-888-482-2524 for a free consultation and see if you may be eligible for an increase.