Restore Veterans’ Compensation Act of 2026

The Restore Veterans’ Compensation Act of 2026 modifies how the government recoups certain separation payments from former military members. This bill primarily affects veterans who received separation pay upon leaving service and later qualify for disability compensation or military retired pay. Specifically, it prevents the reduction of veterans' disability compensation due to their prior receipt of separation, severance, or readjustment pay. For those receiving military retired pay, the bill limits recoupment to the net amount of separation pay received (after taxes) and caps monthly deductions at 25% of their retired pay, unless they choose a faster repayment. It also requires a 90-day notice before deductions begin, allows the Secretary of Defense to waive recoupment in cases of financial hardship, and exempts members who were retirement-eligible when they received voluntary separation pay from having to repay it upon later retirement.