Why Confederate soldiers are not considered ‘US veterans’
The question over whether or not Confederate soldiers were U.S. veterans is largely a symbolic one today. Only one Civil War pension is still being paid (that pensioner was a veteran of both sides of the conflict), and by the time Confederates received real benefits, they were all dead by the following year. No specific legislation exists that identifies Confederate veterans as having equal status to all other American veterans.
However, provisions exist that could add up to that protected status. Under the law, that is.
President Lincoln considered Confederate citizens and soldiers "Americans in rebellion," and not citizen of a foreign country. His view dominated in the days following the end of the war. Lincoln even began the Reconstruction process early with the 1863 Proclamation of Amnesty and Reconstruction, which pardoned the average Joe Confederate troop still fighting for the South.
President Johnson continued the amnesty policy in 1868, granting a full pardon to most former Confederates, including men who fought the Union directly. They all regained their citizenship and voting rights, but were not granted veterans status by the federal government, which means they did not receive the same benefits promised to those who fought for the Union.
As the 19th century turned to the 20th, Americans began to care for Confederate graves the way they cared for Union ones. But this was not because any Federal act told them to, it was just the spirit of reconciliation in a nation fresh from a victory over Spain. Eventually it was codified into law.
U.S. Code 38 does require the government, when requested, to put up a headstone for soldiers of the Union and Confederate armies of the Civil War, which was confirmed again in 1958 under Public Law 85. That same law also extends veterans' pensions "to widows of veterans who served in the military or naval forces of the Confederate States of America during the Civil War."
The closest Confederates come to U.S. veteran status is in a 2001 U.S. Court of Appeals ruling about whether or not the Confederate flag was able to be flown over a national cemetery, administered by the VA. The court upheld the VA's treatment of the rebel graves as equally honored, and that it was not obligated to fly any flag except the American flag over the cemetery.
The CSA flag was not considered a legitimate symbol of the United States and the Confederates buried there were honored as citizens, not as veterans.
So when added up, a Confederate's benefits amounted to much of what was received by a Union veteran, but they'll never be called American veterans. The closest they ever came was "American citizens" ..."who served in the military or naval forces of the Confederate States of America during the Civil War."