TDIU Reform Act of 2026

The Total Disability based on Individual Unemployability Reform Act of 2026 aims to codify the Department of Veterans Affairs' (VA) authority to provide disability compensation for individual unemployability (TDIU). It inserts a new section into title 38, United States Code, detailing the conditions under which a veteran may be assigned a total disability rating if they are unable to secure or follow a substantially gainful occupation due to service-connected disabilities. Eligibility generally requires one service-connected disability rated at 60% or more, or two or more service-connected disabilities with one rated at 40% or more and a combined rating of 70% or more.

The bill specifies how certain disabilities, such as those affecting a single body system or resulting from a common etiology, are considered as one disability for rating purposes. For veterans who do not meet these specific criteria but are still deemed unemployable, a rating board must submit their case to the Director of Compensation Service for a determination. A significant new provision is the limitation on compensation, stating that TDIU may not be paid to a veteran aged 67 or older if they first receive such compensation on or after December 31, 2026. Additionally, the bill defines "marginal employment" as not constituting a substantially gainful occupation, clarifying that income below the poverty threshold or employment in a protected environment can qualify.