After a federal court settlement in March 2025, the U.S. Army has agreed to formally recognize military burn pit exposure as a combat-related condition, removing a major barrier that prevented veterans from receiving tax-free disability benefits for burn pit-induced illnesses. In Smoke et al. v. Driscoll, filed in the United States District Court for the District of Columbia, the Army conceded that open-air burn pits in combat zones should be classified as “instrumentalities of war” under federal tax law, meaning veterans with presumptive conditions caused by burn pit exposure can now claim their disability retirement pay tax-free—a significant financial and legal victory that overturns years of denials.
The settlement came after retired Sgt. 1st Class Kyle Smoke, diagnosed with debilitating asthma, and retired Lt. Col. Jennifer McIntyre, diagnosed with metastatic breast cancer, challenged the Army’s refusal to honor claims filed under the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics (PACT) Act of 2022. This article explains what the settlement means, who qualifies, and how it addresses the tax and benefit complications that made burn pit cases so difficult to resolve.
Table of Contents
- What Is Burn Pit Exposure and Why Did the PACT Act Fail to Protect Veterans?
- The Settlement’s Core Requirement—Reclassifying Burn Pits as Instrumentalities of War
- Meet the Lead Plaintiffs—Sgt. 1st Class Kyle Smoke and Lt. Col. Jennifer McIntyre
- How Retroactive Corrections Work and Why They Matter Financially
- Important Limitations—Not All Burn Pit Exposure Automatically Qualifies
- The Retroactive Correction Process and Documentation Requirements
- The Broader Implications for Future Burn Pit Claims and PACT Act Enforcement
- Frequently Asked Questions
What Is Burn Pit Exposure and Why Did the PACT Act Fail to Protect Veterans?
Military burn pits were open-air waste disposal sites used throughout Iraq, Afghanistan, and other combat zones where the military incinerated garbage, medical waste, munitions packaging, and other materials without pollution controls. Veterans stationed near these pits inhaled smoke and ash containing dioxins, heavy metals, and carcinogenic compounds for months or years. In 2022, Congress passed the PACT Act specifically to recognize that burn pit exposure causes serious illnesses including asthma, respiratory disease, and several cancers, and the law established a presumptive list of conditions eligible for VA health benefits.
However, the law had a critical gap: while it granted VA medical benefits for presumptive conditions, it did not automatically change how the Department of Defense classified these illnesses for the purpose of medical retirement pay. This meant that even when the VA approved a burn pit claim, veterans who were medically retired were often told their disability was “not combat-related,” forcing them to pay federal income tax on retirement benefits that should have been tax-exempt under 26 U.S.C. § 104(b)(3)(B). A veteran receiving $3,000 per month in disability retirement could owe thousands in federal taxes annually due to this classification technicality.
The Settlement’s Core Requirement—Reclassifying Burn Pits as Instrumentalities of War
The Army’s settlement requires it to issue a new internal policy designating open-air burn pits located in combat zones as “instrumentalities of war,” a legal classification that automatically makes disability retirements for burn pit conditions tax-exempt. In plain language, this means the Army must now treat burn pit injuries the same way it treats combat wounds, shrapnel injuries, or other direct war-zone harms.
The practical effect is immediate: any veteran medically retired after March 6, 2025, for a burn pit presumptive condition will receive tax-free disability pay without having to argue about whether their exposure was “combat-related.” However, this policy change also applies retroactively, requiring the Army to correct past denials and recalculate tax liability for veterans who were already medically retired but wrongly classified. The settlement does not itself pay damages to individual veterans; rather, it forces the systematic correction of a classification error that affected thousands of service members. Veterans who were taxed on disability pay between the PACT Act’s enactment in 2022 and the March 2025 settlement may become eligible for tax refunds, though the process for calculating and claiming these retroactive adjustments remains to be clarified by the Army.
Meet the Lead Plaintiffs—Sgt. 1st Class Kyle Smoke and Lt. Col. Jennifer McIntyre
The case was named after two veterans whose experiences exemplify the injustice the settlement corrects. Sgt. 1st class Kyle Smoke, a retired Army NCO, developed debilitating asthma directly traceable to his burn pit exposure in a combat zone. Because his medical board found asthma was the reason for his retirement, he was placed on disability retirement, but the Army initially classified his condition as “not combat-related,” meaning his monthly benefit was fully taxable. Smoke had the diagnosis, the duty location documentation, and a condition on the PACT Act presumptive list, yet the tax classification persisted.
Lt. Col. Jennifer McIntyre’s case was even more striking—she served four deployments and lived and worked within 1.5 to 2.0 miles of burn pits during her service. Despite this documented proximity and a later diagnosis of metastatic breast cancer, breast cancer also appears on the PACT Act presumptive list for burn pit exposure, the Army initially refused to classify her medical retirement as combat-related. McIntyre, a senior officer with full records, faced the same Catch-22: the VA recognized her condition; the Army refused the tax classification. Both veterans, with legal representation from the National Veterans Legal Service Program (NVLSP) and the law firm Sidley Austin LLP, sued not just for themselves but to establish a class action that would cover all current and future veterans in their situations.
How Retroactive Corrections Work and Why They Matter Financially
The settlement mandates that the Army correct all past denials—meaning anyone already medically retired for a burn pit condition whose disability was classified as “not combat-related” will have their record corrected to tax-exempt status. However, understanding the mechanics of this correction is crucial. Simply changing a classification in future paperwork is not enough; the settlement requires the Army to review past decisions and recalculate benefits going back to when the condition occurred. For a veteran who received five years of disability pay at $3,000 monthly ($180,000 total), a reclassification from taxable to tax-exempt status could recover thousands in federal income tax previously paid.
A veteran in the 22% federal tax bracket paying roughly $660 per month in taxes on disability pay would recoup approximately $39,600 over five years. The challenge is that the mechanics of claiming these refunds depend on how the Army issues corrected documentation and what the IRS accepts. Some veterans may need to file amended tax returns (Form 1040-X) for prior years within the statute of limitations (typically three years from filing, though up to ten years in some cases). The settlement does not automatically issue tax refunds; veterans will likely need to understand their individual tax situation and potentially work with a tax professional or veterans advocate to claim refunds or use amended returns to correct their tax burden.
Important Limitations—Not All Burn Pit Exposure Automatically Qualifies
A critical limitation of this settlement is that it applies only to veterans whose medical retirement was based on a presumptive condition listed under the PACT Act for burn pit exposure. The PACT Act includes specific conditions—respiratory diseases, asthma, certain cancers, and neurological conditions are on the presumptive list, but conditions outside this list must still be proven connected to burn pit exposure. For example, a veteran with gastrointestinal disease who was stationed near burn pits must demonstrate that their GI condition was caused by burn pit exposure; it is not presumed.
Additionally, the settlement only addresses the “combat-related” classification for disability retirement pay; it does not change eligibility for VA disability compensation (the separate monthly benefit given to service-connected disabled veterans who are not medically retired). Veterans who left military service with a disability rating but were not medically retired (i.e., they completed their service despite their condition) have a different benefit structure and were not directly addressed by this settlement. Also, the policy applies to burn pits in “combat zones,” a term defined by military regulation; veterans who were stationed in support areas or logistics bases may face disputes about whether their location was sufficiently close to burn pit operations to qualify. Documentation of duty location and distance from burn pits is essential to proving eligibility.
The Retroactive Correction Process and Documentation Requirements
The Army is required to conduct a systematic review of past medical retirement cases to identify affected veterans and correct their classifications. However, this process does not happen automatically or instantly. Veterans who believe they were denied the combat-related classification should gather documentation including: their medical board findings, their duty station assignment orders, any correspondence from the Army about their medical retirement classification, and records showing proximity to burn pits or burn pit operations at their duty location.
The NVLSP, which led this case, is expected to play a role in helping veterans navigate the appeals or correction process, so affected veterans should monitor their communications and any official Army guidance about filing corrections. Some veterans may need to file a formal correction request with their branch of service or the Army’s medical discharge review board to trigger a formal reconsideration. Having clear paperwork showing medical retirement for a presumptive condition, combined with documentation of deployment to a location with burn pit operations, is the strongest foundation for claiming a retroactive correction.
The Broader Implications for Future Burn Pit Claims and PACT Act Enforcement
The Smoke v. Driscoll settlement represents a watershed moment in how the military acknowledges environmental hazards as combat-related injuries. By classifying burn pits as “instrumentalities of war,” the settlement sets a legal precedent that environmental exposure to wartime conditions—not just direct combat trauma—merits the same legal protections as traditional combat wounds. This principle could extend to future claims involving water contamination (such as from PFOA in military water systems), toxic inhalation from other military activities, or other environmental exposures at overseas bases.
The settlement also highlights a lesson from the PACT Act’s first years: congressional intent to recognize a harm is not enough without clear implementing guidance and classification systems. The fact that the VA could approve burn pit claims while the DoD simultaneously denied combat-related status created a damaging gap that harmed veterans for nearly three years. Going forward, legislation recognizing new presumptive conditions should include explicit guidance to all federal agencies about how to classify these conditions in their respective benefit systems. For veterans currently serving or deployed to bases with burn pit operations, this settlement provides evidence that burn pit exposure will eventually be recognized as a serious occupational hazard of military service, strengthening their position if they later file for benefits.
Frequently Asked Questions
Does the settlement provide a direct cash payment to affected veterans?
No, the settlement does not award monetary damages. Instead, it requires the Army to correct past misclassifications, which allows affected veterans to claim refunds of federal income taxes previously paid on disability retirement benefits that should have been tax-exempt.
I was medically retired for a burn pit condition but told it was “not combat-related.” What should I do?
Gather your medical retirement documents and contact the Department of Veterans Affairs or your branch of service’s medical discharge review office to request a correction of your classification. The National Veterans Legal Service Program may also provide guidance on filing a formal appeal or correction request.
Does this settlement cover all conditions I have from burn pit exposure, or only certain ones?
The settlement applies to presumptive conditions listed under the PACT Act (primarily respiratory diseases, asthma, certain cancers, and neurological conditions). If you have a condition not on the presumptive list, you must prove causation. Conditions outside the presumptive list are not automatically covered by the settlement’s reclassification.
What if I was stationed far from the burn pits—am I automatically disqualified?
Not automatically, but proximity to burn pit operations is a factor. Distance matters, and the Army defines “combat zones” where this policy applies. If you can document your duty location and show that burn pit operations occurred there, you may qualify even if you were not directly adjacent to the site.
Can I claim a tax refund for years when I was taxed on disability pay before the settlement?
Possibly, through amended tax returns (Form 1040-X) filed with the IRS. Federal tax law allows refund claims going back three years from filing, though some circumstances may extend this period. Consult a tax professional or veterans advocate to determine your eligibility.
Does this affect my VA disability compensation rating if I’m receiving disability pay but was not medically retired?
This settlement specifically addresses medical retirement pay classification. VA disability compensation (monthly payments to service-connected disabled veterans who completed their service) has a different benefit structure. The settlement does not directly change that system, though the broader legal principle may influence future policy.