If you're a military retiree with a VA disability rating, you've likely encountered two confusing acronyms: CRDP and CRSC. Both programs exist to solve the same fundamental problem—ensuring disabled veterans don't lose their hard-earned retirement pay when they receive VA disability compensation. But they work in completely different ways, have different eligibility requirements, and can result in vastly different monthly payments.
Choosing the wrong program could cost you thousands of dollars per year in lost benefits. This comprehensive 2026 guide breaks down everything you need to know about CRDP (Concurrent Retirement and Disability Pay) and CRSC (Combat-Related Special Compensation).
Table of Contents
- The VA Waiver Problem: Why These Programs Exist
- CRDP Explained: Automatic Restoration for 50%+ Ratings
- CRSC Explained: Tax-Free Combat Compensation
- Side-by-Side Comparison: CRDP vs CRSC
- Real-World Calculation Examples (2026 Rates)
- Decision Framework: Which Program is Better for You?
- How to Apply for CRSC
- Annual Election: Switching Between Programs
- Special Situations
- Common Mistakes to Avoid
- State Tax Implications
- Frequently Asked Questions
The VA Waiver Problem: Why These Programs Exist
Before understanding CRDP and CRSC, you need to understand the "VA waiver" that makes them necessary.
The Historical Problem
For decades, military retirees faced an unfair financial penalty: you couldn't receive both your full military retirement pay AND your full VA disability compensation. Instead, your retirement pay was reduced dollar-for-dollar by the amount of your VA disability payment.
This was called the "VA waiver"—you had to waive (give up) part of your retirement pay to receive VA compensation. The government's logic was that receiving both would be "double dipping."
A Real Example of the Offset
Without concurrent receipt programs:
- Military retirement pay: $3,000/month
- VA disability compensation (70% rating): $1,831/month
- Actual retirement received: $1,169/month ($3,000 - $1,831)
- Total monthly income: $3,000/month ($1,169 retirement + $1,831 VA)
Notice the problem? You earned $3,000 in retirement pay through your years of service, but you only get $1,169 of it because the VA offset took $1,831. Your total income is actually less than your retirement alone would be without the offset.
Congress Fixes the Problem (Partially)
Congress recognized this was unjust. In response, they created two programs to restore some or all of the retired pay lost to the VA waiver:
- CRSC (2002) - For combat-related disabilities
- CRDP (2004) - For retirees with 50%+ VA ratings
Key Understanding: CRDP and CRSC don't give you "extra" money beyond what you're entitled to. They restore retirement pay you already earned but were forced to give up due to the VA waiver.
CRDP Explained: Automatic Restoration for 50%+ Ratings
Concurrent Retirement and Disability Pay (CRDP) is the simpler of the two programs. It completely eliminates the VA waiver if you meet the criteria.
CRDP at a Glance
- Minimum VA Rating: 50% or higher
- Application Required: No - completely automatic
- Combat Requirement: None - any service-connected disability qualifies
- Tax Treatment: Taxable (same as retirement pay)
- Years of Service: 20+ years (or Chapter 61 with 20+)
CRDP Eligibility Requirements
You automatically qualify for CRDP if you meet ALL of these conditions:
- You are entitled to military retirement pay
- Regular retirees with 20+ years of service
- Reserve/Guard retirees with 20+ qualifying years who have reached retirement age (typically 60)
- Chapter 61 disability retirees with 20+ years of service
- You have a VA disability rating of 50% or higher
- Combined VA disability rating must be at least 50%
- Individual conditions don't need to be combat-related
- Disabilities can be service-connected from any cause
How CRDP Works
CRDP is straightforward: it eliminates the VA waiver entirely.
With CRDP:
- Military retirement pay: $3,000/month (no reduction)
- VA disability compensation: $1,831/month (70% rating)
- Total monthly income: $4,831/month
You receive your full retirement pay AND your full VA disability compensation with no offset.
Key Features of CRDP
| Feature | Details |
|---|---|
| Application Required? | No - Completely automatic |
| Processing | DFAS automatically enrolls eligible retirees |
| Tax Treatment | Retirement pay is taxable; VA compensation is tax-free |
| Rating Requirement | 50% VA disability or higher |
| Combat-Related Requirement | No - any service-connected disabilities qualify |
| Payment Method | Two separate payments (retirement + VA) |
| Annual Re-enrollment | Not required - continuous once eligible |
CRSC Explained: Tax-Free Combat Compensation
Combat-Related Special Compensation (CRSC) is more complex than CRDP but offers a significant advantage: it's completely tax-free.
CRSC at a Glance
- Minimum VA Rating: 10% or higher (combat-related only)
- Application Required: Yes - must apply through service branch
- Combat Requirement: Yes - disabilities must be combat-related
- Tax Treatment: 100% tax-free
- Years of Service: 20+ years OR Chapter 61 with 30%+ disability
What Qualifies as "Combat-Related"?
The definition of "combat-related" is broader than most people think. CRSC covers disabilities resulting from:
1. Armed Conflict / Direct Combat
- Injuries from enemy fire, IEDs, combat operations
- Purple Heart injuries automatically qualify
- Combat vehicle accidents
- Wounds received in combat zones
2. Hazardous Duty
- Airborne operations (parachuting injuries)
- Flight operations
- Diving operations
- Demolitions/EOD work
- Special operations training
3. Instrumentality of War
- Agent Orange exposure (Vietnam)
- Burn pit exposure (Iraq/Afghanistan/other conflicts)
- Radiation exposure
- Chemical warfare exposure
- Depleted uranium exposure
4. Simulated War Exercises
- Training accidents during combat preparation
- Live-fire exercises
- War games injuries
Important: Disabilities do NOT need to occur during actual combat. A training parachute accident causing back injuries can qualify as combat-related under "hazardous duty."
How CRSC is Calculated
CRSC calculation is more complex than CRDP because it involves multiple steps:
Step 1: Determine Your Combat-Related Rating
Your service branch reviews your disabilities and determines what percentage is combat-related:
- You might have a 70% VA rating, but only 40% is deemed combat-related
- Or all 70% might be combat-related
- This is determined on a case-by-case basis
Step 2: Calculate the CRSC Payment Amount
CRSC payment is the lesser of:
- The VA disability payment for your combat-related rating, OR
- The amount of retired pay you're losing to the VA waiver
Side-by-Side Comparison: CRDP vs CRSC
| Factor | CRDP | CRSC |
|---|---|---|
| Minimum VA Rating | 50% or higher | 10% or higher |
| Combat-Related Requirement | No - any service-connected disabilities | Yes - only combat-related disabilities |
| Application Process | Automatic (no application) | Must apply through service branch |
| Processing Time | Immediate when eligible | 60-120 days |
| Tax Treatment | Taxable (same as retirement pay) | Tax-free |
| Years of Service Required | 20+ years (or Chapter 61 with 20+) | 20+ years OR Chapter 61 with 30%+ disability |
| Payment Structure | Two payments (retirement + VA) | Three payments (reduced retirement + VA + CRSC) |
| Annual Re-election | Not applicable | Can switch to CRDP in December |
| Best For | Retirees with 50%+ non-combat disabilities | Retirees with significant combat injuries |
Real-World Calculation Examples (2026 Rates)
Let's work through real scenarios using 2026 VA disability rates (which include the 2.8% COLA increase effective December 1, 2025).
2026 VA Disability Compensation Rates (Veteran Alone)
| VA Rating | Monthly Payment |
|---|---|
| 10% | $180.42 |
| 20% | $360.85 |
| 30% | $558.21 |
| 40% | $803.61 |
| 50% | $1,144.54 |
| 60% | $1,449.11 |
| 70% | $1,831.04 |
| 80% | $2,129.23 |
| 90% | $2,392.75 |
| 100% | $3,985.57 |
Example 1: E-7 Retiree, 70% VA Rating, All Combat-Related
Retiree Profile:
- 22 years of service
- E-7 at retirement
- High-3 average: $5,200/month
- Retirement multiplier: 55% (22 years × 2.5%)
- Monthly retirement pay: $2,860
- 70% VA disability: $1,831/month
- All disabilities are combat-related
Option A: CRDP
- Full retirement pay: $2,860
- VA disability: $1,831
- Total: $4,691/month
- Taxes: ~$500/month (25% rate)
- Net: ~$4,191/month
Option B: CRSC
- Reduced retirement: $1,029
- VA disability: $1,831
- CRSC payment: $1,831 (tax-free)
- Total: $4,691/month
- Taxes: ~$180/month
- Net: ~$4,511/month
Winner: CRSC - Provides $320/month more after taxes due to tax-free status
Example 2: O-4 Retiree, 50% VA Rating, None Combat-Related
Retiree Profile:
- 20 years of service
- O-4 at retirement
- High-3 average: $9,000/month
- Monthly retirement pay: $4,500
- 50% VA disability: $1,145/month
- No combat-related disabilities
Only Option: CRDP
- Full retirement pay: $4,500
- VA disability: $1,145
- Total: $5,645/month
CRSC is not available - No combat-related disabilities
Decision Framework: Which Program is Better for You?
Quick Decision Tree
Q1: Do you have 20+ years of service?
- No → Skip to CRSC analysis (CRDP not available unless Chapter 61 with 20+)
- Yes → Continue
Q2: Is your VA disability rating 50% or higher?
- No → CRDP not available; check CRSC eligibility
- Yes → CRDP is automatically active
Q3: Do you have combat-related disabilities rated at least 10%?
- No → CRDP is your only option
- Yes → You might be eligible for both; compare them
Q4: What percentage of your VA rating is combat-related?
- 80-100% combat-related → CRSC likely better (tax advantage)
- 40-70% combat-related → Calculate both options
- 0-30% combat-related → CRDP almost certainly better
The Tax Bracket Tipping Point
The higher your tax bracket, the more attractive CRSC becomes due to its tax-free status:
| Tax Bracket | Combat-Related % Needed for CRSC to Equal CRDP |
|---|---|
| 12% federal | 90%+ of disabilities must be combat-related |
| 22% federal | 75%+ of disabilities must be combat-related |
| 24% federal | 70%+ of disabilities must be combat-related |
| 32% federal | 60%+ of disabilities must be combat-related |
| 35%+ federal | 55%+ of disabilities must be combat-related |
How to Apply for CRSC
CRDP is automatic, but CRSC requires an application. Here's the complete process.
Required Documentation
- Copy of your DD-214 (Certificate of Release or Discharge)
- VA rating decision letter showing your current rating
- Detailed VA medical records for each combat-related condition
- Service medical records from time of injury
- Orders or documentation showing combat deployment or hazardous duty
- Purple Heart citation (if applicable)
- After Action Reports (for combat injuries)
- Any documentation linking your injuries to combat/hazardous duty
Where to Submit Your Application
Army Retirees:
Department of the Army
U.S. Army Human Resources Command
ATTN: CRSC Division
1600 Spearhead Division Avenue
Fort Knox, KY 40122-5402
Phone: 888-281-3254
Navy and Marine Corps Retirees:
Department of the Navy
Naval Council of Personnel Boards
Combat-Related Special Compensation Branch
720 Kennon Street SE, Suite 309
Washington Navy Yard, DC 20374-5023
Phone: 877-366-2772
Email: CRSC@navy.mil
Air Force Retirees:
US Air Force Personnel Center
Disability Division (CRSC)
550 C Street West, Suite 6
Randolph AFB TX 78150-4708
Phone: 800-525-0102
Coast Guard Retirees:
Commander (PSC-PSD-MED)
Personnel Service Center
2703 Martin Luther King Jr Avenue SE
Washington, DC 20593-7200
Phone: 202-795-6631
Important: Send copies only, never originals. Keep a complete copy of your entire application package for your records. Download DD Form 2860 from your service branch's website.
Annual Election: Switching Between Programs
If you're eligible for both CRDP and CRSC, you're not locked into your choice forever. Each year, you can switch during an annual open season.
Open Season: December 1-31
Every December, DFAS conducts an open season where eligible retirees can elect to change from CRSC to CRDP or vice versa.
- December 1: Open season begins
- December 31: Last day to submit election change
- January 1: New election takes effect
How to Change Your Election
Option 1: Online (Fastest)
- Log in to myPay at https://mypay.dfas.mil
- Navigate to "CRDP/CRSC Election"
- Select your preferred program
- Submit electronically
- Receive confirmation email
Option 2: Phone
Call DFAS at 800-321-1080
Special Situations
Purple Heart Recipients
If you've been awarded the Purple Heart, injuries related to your Purple Heart automatically qualify for CRSC. You don't need to prove combat relation for those specific injuries.
Agent Orange / Burn Pit Exposure
Presumptive conditions automatically qualify as combat-related under "instrumentality of war." The PACT Act expanded recognition of toxic exposures. Approval rates for these conditions are very high.
Chapter 61 Disability Retirees
- CRDP: Available only if you have 20+ years
- CRSC: Available even with fewer than 20 years (if 30%+ disability)
Cap for Chapter 61: Your total compensation (disability retirement + VA + CRSC) cannot exceed what you would have received for longevity retirement (2.5% × years of service × High-3 pay).
Divorce and Former Spouse Protection
- CRDP: IS subject to division in divorce (considered restored retired pay)
- CRSC: Is NOT subject to division in divorce (considered special compensation)
Common Mistakes to Avoid
Mistake #1: Assuming CRSC is Always Better Because It's Tax-Free
Tax-free status only matters if the dollar amounts are comparable. If CRDP gives you $2,500 more gross than CRSC, even with taxes you'll likely come out ahead with CRDP.
Mistake #2: Not Applying for CRSC If You Have Any Combat Service
The definition is broad. Training injuries, hazardous duty, Agent Orange, burn pits—you might be surprised what qualifies. Apply anyway and let your service branch decide.
Mistake #3: Forgetting About State Taxes
When comparing CRDP vs CRSC, factor in your state's tax treatment of military retirement. In high-tax states like California, CRSC's tax-free status becomes much more valuable.
Mistake #4: Missing the 6-Year Statute of Limitations
You must file CRSC within 6 years of your VA rating decision or the date you become entitled to retired pay to receive full retroactive payments.
State Tax Implications
States That Don't Tax Military Retirement (Full Exemption)
The following 37 states completely exempt military retirement from state income tax, making CRDP more attractive:
Full Exemption States: Alabama, Alaska, Arizona, Arkansas, Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, West Virginia, Wisconsin, Wyoming, District of Columbia
States That Fully Tax Military Retirement
Full Taxation States: California, Colorado, Idaho, Kentucky, Montana, New Mexico, Rhode Island, South Carolina, Utah, Vermont, Virginia
Key Takeaway: The higher your state taxes military retirement, the more valuable CRSC becomes. A California retiree might save $300-500/month with CRSC compared to CRDP due to the 9.3% state tax rate.
Frequently Asked Questions
Can I receive both CRDP and CRSC at the same time?
No. By law, you must choose one or the other. If you're eligible for both, DFAS will automatically pay whichever provides the higher benefit unless you specify otherwise.
If my VA rating drops below 50%, what happens?
Your CRDP eligibility ends. The VA waiver returns, reducing your retirement pay. You can apply for CRSC if you have combat-related disabilities of at least 10%.
How long does the CRSC application process take?
Typical processing is 60-120 days, but it varies by service branch. Air Force is often fastest (60 days), Navy/Marine Corps can take longer (90-120 days).
Is CRSC taxable?
No. CRSC payments are 100% tax-free at both federal and state levels.
Can my former spouse get part of my CRSC in a divorce?
No. CRSC is considered special compensation, not retired pay, and is not subject to division under the Uniformed Services Former Spouses' Protection Act. However, CRDP (restored retirement pay) can be divided.
Do I need to apply for CRDP?
No. CRDP is completely automatic. If you have 20+ years of service and a 50%+ VA rating, DFAS will automatically enroll you.
Action Steps: What to Do Right Now
Your Next Steps
- Find your numbers: Locate your latest retirement pay statement and VA award letter
- Determine your eligibility: Check if you meet CRDP requirements (50%+ VA, 20+ years) and/or CRSC requirements (combat-related disabilities)
- Calculate both options: Use our Military Retirement Calculator to model both scenarios
- Apply for CRSC if eligible: Don't wait—the 6-year statute of limitations means you could lose retroactive payments
- Mark your calendar: Every November, recalculate both options before December's open season
Related Articles
- Military Divorce & Retirement Pay Division: USFSPA, 10/10 Rule & Frozen Benefit Guide 2026
- 2026 Military Retirement & VA Disability Rates: Complete Guide with COLA Increases
- VA Disability with Dependents 2026: Complete Rate Tables & Calculator Guide
- 10 Best States for Military Retirees in 2026: Tax Benefits, Cost of Living & VA Access
- How to Calculate Military Retirement Pay in 2026: Step-by-Step Guide
This article provides general information about CRDP and CRSC benefits. Individual circumstances vary. For specific questions about your eligibility or payments, contact DFAS at 800-321-1080 or your service branch's CRSC office.