1. Short title This Act may be cited as the Restore Veterans' Compensation Act of 2017 . 2. Recoupment of separation pay, special separation benefits, voluntary separation incentive, and voluntary separation pay and benefits from members of the Armed Forces (a) Separation pay upon involuntary discharge or release from active duty and special separation benefits (1) Elimination of recoupment from members receiving veterans disability compensation Paragraph (2) of section 1174(h) of title 10, United States Code, is amended to read as follows: (2) (A) A member who has received separation pay under this section, or severance pay or readjustment pay under any other provision of law, based on service in the armed forces shall not be deprived, by reason of the receipt of such separation pay, severance pay, or readjustment pay, of any disability compensation to which the member is entitled under the laws administered by the Department of Veterans Affairs. (B) The amount of disability compensation to which a member may be entitled under the laws administered by the Department of Veterans Affairs may not be reduced on account of the receipt of separation pay, severance pay, or readjustment pay. . (2) Recoupment from members receiving retired or retainer pay limited to net amount of separation pay Section 1174(h)(1) of title 10, United States Code, is amended by inserting before the period at the end the following: , less the amount of Federal income tax withheld from the separation pay, severance pay, or readjustment pay (such withholding being at the flat withholding rate for Federal income tax withholding, as in effect pursuant to regulations prescribed under chapter 24 of the Internal Revenue Code of 1986) . (3) Percentage limitations on recoupment from members receiving retired or retainer pay and recoupment process Section 1174(h)(1) of title 10, United States Code, as amended by paragraph (2), is further amended— (A) by inserting (A) after (1)