Military-related disability retirement pay is tax-free, the Tax Court confirms. The exclusion applies to amounts paid by the military as a pension or annuity for injuries or sickness resulting from service in the armed forces. In this case, a man who sustained a serious head injury while at Army boot camp in 1984 received the disability retirement amounts in 2012 (Keeter, TC Summ. Op. 2017-36). Interestingly, IRS had audited him twice before on the same issue in prior tax years, and he won in court both times. Those decisions didn’t bind IRS for future years.