S. 5367 — Restore Veterans’ Compensation Act of 2026

This section eliminates recoupment of separation pay, severance pay, or readjustment pay from veterans disability compensation. It limits recoupment from retired or retainer pay to the net amount after federal income tax withholding, caps monthly deductions at 25 percent of retired pay unless the member requests an accelerated rate, requires 90 days’ advance notice with specified information, and authorizes hardship waivers. It applies the same rules to voluntary separation incentives under section 1175 and voluntary separation pay and benefits under section 1175a, effective the first day of the first month after enactment.