VA Funding Bill: Toxic Exposures Fund, Riders, and FY2027

The VA funding bill currently in effect is Public Law 119-37, signed by President Trump on November 12, 2025, which provides the Department of Veterans Affairs with $133.9 billion in discretionary funding and $312.3 billion in mandatory funding for fiscal year 2026.¹² The FY2027 version, H.R. 8469, passed the House 400–15 on May 15, 2026, and is now waiting on the Senate.³

What the FY2026 Law Funds

The enacted law started as H.R. 3944 and was bundled into a three-bill package covering Military Construction and Veterans Affairs, Agriculture, and the Legislative Branch before the president signed it.⁴ The Senate had passed its standalone version 87–9 on August 1, 2025.⁵

On the VA side, discretionary funding rose $4.7 billion over FY2025.¹ The largest single piece is $115 billion for discretionary VA medical care, covering more than 9.2 million veterans and running more than $2.3 billion above the previous year.² Within that spending, specific commitments include:

$18.9 billion for mental health, with $698 million dedicated to suicide prevention outreach
$3.5 billion for the caregiver support program
$3.5 billion for veteran homelessness prevention and housing assistance
$1.4 billion for women’s health, including gender-specific care and facility improvements
$342 million for rural health, including transportation and telehealth

The $312.3 billion mandatory side pays the benefits that flow automatically to eligible veterans. VA budget documents put roughly $227 billion of that toward compensation and pensions, most of it disability payments to more than seven million veterans and survivors, and about $20.4 billion toward readjustment benefits such as education and job training.⁶

The Cost of War Toxic Exposures Fund

Created by the PACT Act of 2022, this fund covers health care and claims processing for veterans exposed to burn pits, Agent Orange, and other environmental hazards. The FY2026 law put $52.7 billion into it, more than $22 billion above the FY2025 level. Of that, $49.8 billion is for medical care, $1.4 billion is for PACT Act claims processing at the Veterans Benefits Administration, and $57 million is for research.²

The growth reflects real demand. In July 2024, the VA Secretary reported a $12 billion shortfall in the fund for FY2025, tied to increased utilization driven by the PACT Act. Fund spending is classified as mandatory and exempt from sequestration. One boundary worth knowing: the fund cannot be used to pay disability compensation or survivor benefits themselves, which come out of the separate Compensation and Pensions account.⁷

The FY2027 Bill Moving Through Congress

The Trump administration requested $488.2 billion for the VA in FY2027, a 7.7 percent increase over the enacted FY2026 level of $453.3 billion, split between $205.6 billion discretionary and $282.6 billion mandatory.⁸ The request also proposed 443,327 full-time VA employees, roughly 9,000 fewer than in 2025, and sought to cut funding for diversity, equity, and inclusion initiatives.⁹

The House Appropriations Committee approved H.R. 8469 unanimously, 58–0, on April 21, 2026, and the full House passed it 400–15 on May 15.¹⁰ The bill totals $469.49 billion, with $157 billion in discretionary spending and $323.9 billion in mandatory programs.³ The VA share, close to $450 billion, is a 3 percent increase over FY2026 but well below the White House request. The gap sits mostly on the discretionary side: the House allocated $137.8 billion in discretionary spending against the administration’s $205.6 billion request.¹¹

The Toxic Exposures Fund Reclassification Fight

For a second year, the administration proposed shifting about $52 billion in Toxic Exposures Fund money from mandatory to discretionary status.¹² Lawmakers in both parties rejected the change. The mandatory classification matters because it shields those dollars from the annual negotiations that can shrink discretionary accounts, and members argued the shift would jeopardize money Congress had specifically earmarked for veterans exposed to burn pits and other hazards.¹¹

Strings on the Electronic Health Record Rollout

The House bill allocates $3.4 billion for VA’s electronic health record modernization project, matching the FY2026 level but below the $4.2 billion request. Twenty-five percent of the money is withheld until July 1, 2027, and can only be released once the VA delivers an updated life-cycle cost estimate, a site-by-site deployment schedule, evidence that facilities already using the system meet performance metrics, and staffing projections.¹³ The rollout has been on pause since April 2023 after user complaints at the initial deployment sites.¹⁴

Accounts Facing Proposed Cuts

Even inside the overall increase, the administration’s request would reduce several individual VA accounts. The largest proposed reductions include $619 million from medical support and compliance, $104 million from grants for state extended care facilities, and $90 million from grants for construction of veterans cemeteries. The Board of Veterans’ Appeals, VA’s Office of Inspector General, and medical and prosthetic research accounts would also see smaller cuts.⁸ Whether Congress preserves or reverses those reductions will be worked out in conference.

Policy Riders: Then and Now

Recent VA funding bills have carried policy fights well beyond spending. The House-passed FY2024 bill in 2023 included provisions that would have barred VA-funded abortions except in narrow circumstances, prohibited funding for gender-affirming surgical procedures and hormone therapies, blocked spending on diversity, equity, and inclusion programs, restricted which flags could be displayed at VA facilities and national cemeteries, and ended COVID-19 mask mandates at VA medical centers.¹⁵ The Biden administration issued a veto threat.¹⁶

The FY2027 House bill took a different approach. H.R. 8469 contains administrative restrictions such as requirements to use American steel, limits on foreign contractor work, and the continued prohibition on closing Naval Station Guantanamo Bay, but does not include the reproductive health, gender-affirming care, or DEI riders that dominated earlier cycles.¹⁷ The 400–15 vote suggests those provisions were left out to secure bipartisan support.

What’s Next in the Senate

As of late June 2026, the Senate had not yet held a committee markup or a floor vote on its FY2027 bill.¹⁸ Once it does, differences with the House version will need to be reconciled before a final package reaches the president.

A Separate Bill That Isn’t a Funding Bill

Readers hearing about proposed cuts to disability compensation for tinnitus or sleep apnea should know those changes are not part of the appropriations bill. They come from H.R. 9237, the Take Care of America’s Veterans Act, a separate authorization measure introduced on June 10, 2026, by Rep. Mike Bost of Illinois. It packaged the Major Richard Star Act (which would let certain combat-disabled retirees receive both disability compensation and retired pay) alongside revisions to VA disability ratings for tinnitus and sleep apnea.¹⁹

According to Democratic Ranking Member Mark Takano, the bill would cut at least $60 billion from veterans’ benefits over ten years, eliminating compensation for service-connected tinnitus and reducing compensation for most veterans with sleep apnea who use a CPAP device, applying to new claims and reassessments of existing ones. VFW National Commander Carol Whitmore said the organization opposed the package because it required “future disabled veterans to bear the cost” of benefit expansions, and DAV National Commander Coleman Nee called the cuts a “budget-driven decision.”²⁰ The House cancelled the scheduled vote on H.R. 9237 on June 25, 2026, as opposition mounted.²¹

1
The White House. H.R. 3944 Statement of Administration Policy
2
Senate Appropriations Committee. FY26 MCVA Conference Bill Summary
3
House Appropriations Committee. House Passes First FY27 Bill Fully Funding Veteran Care and Supporting Military
4
Congress.gov. H.R. 3944 – All Information
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Senate Appropriations Committee. Senate Passes FY 2026 MilCon-VA Appropriations Bill
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Department of Veterans Affairs. FY 2026 Budget in Brief
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Congress.gov. Cost of War Toxic Exposures Fund
8
Department of Veterans Affairs. FY 2027 Budget in Brief
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MOAA. Trump’s VA Budget Request Tops $488 Billion for Fiscal 2027
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House Appropriations Committee. Committee Approves FY27 Military Construction, Veterans Affairs Appropriations
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Military Times. House Passes Budget Bill for Veterans Affairs, Military Construction
12
Military Times. Trump’s VA Budget Request Tops $488 Billion for Fiscal 2027
13
Nextgov/FCW. House FY27 VA Funding Bill Allocates $3.4B for EHR Rollout
14
Federal News Network. VA EHR Reboot Aims for Faster Deployments After Years of Delays and Outages
15
Penn Capital-Star. U.S. House Spending Bill for the VA Renews Fight Over Abortion Access, Transgender Care
16
NBC News. House Republicans Pass New Abortion Restrictions in Veterans Affairs Bill
17
GovInfo. H.R. 8469 Reported in House
18
Committee for a Responsible Federal Budget. Appropriations Watch: FY 2027
19
Congress.gov. H.R. 9237 – Take Care of America’s Veterans Act
20
House Democrats Veterans’ Affairs Committee. Ranking Member Takano Warns Against Republican Bid to Strip Veterans of Their Disability Benefits
21
GovExec. House Cancels Vote on VA Overhaul Bill as Opposition Mounts