Disability retirement pay you receive as a pension, annuity or similar allowance for an injury or sickness that resulted from active service is not counted as taxable income in Arkansas. The same treatment covers VA disability compensation and pension payments to veterans and their families, grants for a home designed for wheelchair living, grants for a vehicle if you lost your sight or the use of a limb, and benefits under a dependent-care assistance program.
There is nothing to apply for. Leave these payments out of the income you report on your Arkansas return. IRS Publication 525 explains which payments count as disability benefits.
Your VA award letter showing the payments and what they are for.
