CRSC vs CRDP
TL;DR. Military retirees with a service-connected VA rating face the historical VA-waiver: retirement pay reduced dollar-for-dollar by VA compensation. Two programs reverse the waiver. CRDP (10 USC 1414) automatically restores full retirement for retirees with 20+ years and a VA rating of 50% or more; it is taxable military retirement. CRSC (10 USC 1413a) pays a separate tax-free amount tied to combat-related disabilities; available to medical retirees with any years of service and length-of-service retirees with 20+ years. CRSC is tax-free under IRC 104. A retiree must elect one or the other each month (DFAS open season in December). CRSC wins when combat-relatedness is high and the marginal tax bracket is high. CRDP wins when most disabilities are not combat-related or the bracket is low.
Background: the VA-waiver and what concurrent receipt reversed
For most of the 20th century, 38 USC 5305 required a military retiree to "waive" an equal amount of retirement pay to receive VA disability compensation. The waiver was dollar-for-dollar. A retiree with $3,000/month gross retirement and a $1,500/month VA award received $1,500 retirement + $1,500 VA = $3,000 total. The veteran was no better off in gross dollars, but slightly better off after tax (the $1,500 VA portion was tax-free under IRC 104(a)(4); the equivalent retirement would have been taxable).
The 2003 National Defense Authorization Act and the 2008 NDAA created two concurrent-receipt programs that partially or fully reverse the waiver, depending on eligibility.
CRDP: 10 USC 1414
Eligibility
Concurrent Retirement and Disability Pay restores waived retirement pay automatically when both conditions are met:
- The retiree has 20 or more years of creditable service for retirement (regular retirement, REDUX, or High-3), and
- The retiree has a VA service-connected disability rating of 50% or higher.
Medical retirees (under 20 years of service, retired for disability under Chapter 61) are NOT eligible for CRDP. They may be eligible for CRSC instead.
Mechanics
DFAS automatically applies CRDP once VA and DFAS records match. No application required. The retiree receives full retirement pay plus full VA compensation, side by side. The VA-waiver is functionally undone.
CRDP was phased in from 2004 to 2014 (the "ten-year phase-in"). Full restoration applies in 2026.
Tax treatment
CRDP is military retirement pay. It is fully taxable as ordinary income and reported on DFAS 1099-R. The VA compensation portion remains tax-free under IRC 104(a)(4) and is not on the 1099-R.
CRSC: 10 USC 1413a
Eligibility
Combat-Related Special Compensation requires:
- Entitlement to retired pay (regular, reserve, or medical retirement under Chapter 61), and
- A VA service-connected disability rating of 10% or higher, and
- The disability is combat-related under the service's CRSC determination.
CRSC is available to (a) medical retirees with any number of years of service, including those medically retired before 20 years; and (b) length-of-service retirees with 20+ years. Reservists who have begun receiving retired pay (typically at age 60) are eligible.
What counts as combat-related
The combat-related determination, made by the retiree's military department (not the VA), uses four categories:
- Direct result of armed conflict. Injury sustained in actual combat or as a result of enemy action.
- Hazardous service. Aerial flight, parachute duty, demolition duty, experimental stress duty, diving duty, or similar designated hazardous service.
- Conditions simulating war. Training exercises that closely simulate combat conditions, including live-fire exercises, combat-equivalent maneuvers, and martial arts/combatives training.
- Instrumentality of war. Injury caused by equipment designed for military combat (weapons, military vehicles, ordnance, military aircraft), regardless of whether the injury occurred in combat or peacetime.
A VA rating decision identifies the disability and its percentage. The military department's CRSC board then determines what portion of that rating is combat-related under the four categories. The combat-related portion drives the CRSC payment.
Mechanics
CRSC requires application via DD Form 2860. Submit to the retiree's service:
| Service | CRSC Board |
|---|---|
| Army | Army Human Resources Command (HRC), Fort Knox |
| Navy / Marine Corps | Navy Council of Review Boards, Washington DC |
| Air Force / Space Force | Air Force Personnel Center (AFPC), JBSA-Randolph |
| Coast Guard | Coast Guard Personnel Service Center |
Include all VA rating decisions, service treatment records documenting the combat or combat-equivalent injury, line-of-duty determinations, and any DD 214 narrative reasons. Decisions can be appealed within the service; reconsideration is available with new evidence.
Tax treatment
CRSC is tax-free under 26 USC 104. It is not reported on Form 1040. No federal income tax, no FICA, no Medicare. Most states follow the federal exclusion (federal AGI conformity).
Calculate your VA rating →The election: one or the other each month
A retiree cannot receive both CRSC and CRDP simultaneously. DFAS administers an annual open-season election in December for the following calendar year. The retiree picks the program that pays more (after tax). DFAS automatically applies whichever was selected.
The election can also be made on initial CRSC approval (the retiree converts from CRDP to CRSC effective the month of approval, or stays with CRDP if the math is worse). DFAS will issue back pay or recoupment depending on the election change.
Side-by-side comparison
| Feature | CRDP | CRSC |
|---|---|---|
| Statute | 10 USC 1414 | 10 USC 1413a |
| Years of service required | 20+ | Any (including medical retirees) |
| VA rating required | 50%+ | 10%+ AND combat-related |
| Combat-related? | Not required | Required |
| Application required? | No (automatic) | Yes (DD Form 2860) |
| Tax treatment | Taxable (military retirement) | Tax-free (IRC 104) |
| Reported on 1099-R? | Yes | No |
| Phase-in complete? | 2014 | 2008 |
| Counts as earned income? | No (retirement) | No |
When CRSC beats CRDP
Three conditions push toward CRSC:
- High combat-relatedness. If the combat-related portion of the rating is large (most of the disability arose from combat, hazardous duty, training conditions simulating war, or instrumentalities of war), CRSC's tax-free dollars often exceed CRDP's taxable restoration.
- High marginal tax bracket. A 22% bracket retiree converting $1,000 of taxable CRDP to tax-free CRSC saves $220/month, $2,640/year. A 24% bracket retiree saves $240/month, $2,880/year. At 32%, $320/month, $3,840/year. Tax bracket sensitivity grows with retiree income (second-career W-2, IRA distributions, spouse income).
- Medical retirement (under 20 years). Medical retirees are not eligible for CRDP at all. CRSC is the only path.
When CRDP beats CRSC
Three conditions push toward CRDP:
- Low or no combat-relatedness. Many service-connected disabilities are not combat-related under CRSC standards. Migraines aggravated by office duty, sleep apnea, lower-back strain from prolonged sitting — these may rate at the VA but not qualify under CRSC's four categories. CRDP restores the entire retirement amount regardless of combat-relatedness.
- Low marginal tax bracket. A 12% bracket retiree pays $120 in tax on each $1,000 of CRDP. The after-tax CRDP is $880 versus the full $1,000 of CRSC — but CRSC only pays on the combat-related portion. If the combat-related portion is small, CRDP's full restoration on the full rating wins despite the tax.
- Full 100% combined rating with mostly non-combat secondaries. Many 100% retirees combined to 100% via secondary service-connected conditions (sleep apnea secondary to PTSD, hypertension secondary to PTSD). Secondary conditions may or may not be combat-related; the analysis is fact-specific.
Worked example: CRSC wins for a combat medical retiree
Veteran: Army Staff Sergeant (E-6), 8 years service, medically retired in 2018 after IED injury in Afghanistan. TBI 70%, PTSD 50%, lumbar spine 20%, tinnitus 10%, hearing loss 10%. VA combined rating: 100% (with bilateral factor and Combined Ratings Table math).
All five disabilities arise from the IED detonation (direct result of armed conflict) or from secondary conditions tied to that event. The Army CRSC board approves 100% combat-related on the entire rating.
Retired pay (medical, Chapter 61): $2,800/month gross. Before concurrent receipt, the VA-waiver would have reduced this to roughly $800 (after waiving an amount equal to VA compensation). With CRSC, the retiree receives full retirement plus VA plus CRSC.
VA compensation 100% (single, no dependents at separation): approximately $3,938.58/month, tax-free.
CRDP option: Not eligible. Under 20 years of service, medical retirement. CRDP requires 20+ years.
CRSC option: Combat-related amount equals the VA waiver amount, capped at the difference between retirement pay and what retirement would be at 20 years. For a Chapter 61 retiree with 8 years, the CRSC is limited to the longevity-portion equivalent. CRSC computation: roughly $1,200/month tax-free (illustrative; actual calculation uses retired-pay-multiplier formulas in DoDFMR Vol 7B Ch 63).
| Income source | Monthly | Tax status |
|---|---|---|
| Retired pay (gross) | $2,800 | Taxable |
| VA-waiver (reduces retired pay) | -$2,800 | (retirement reduced to zero by full waiver) |
| CRSC payment | +$1,200 | Tax-free |
| VA disability compensation | $3,938.58 | Tax-free |
| Total | $5,221 | 100% tax-free |
Without CRSC, the retiree would receive $0 retirement (full waiver) + $3,938.58 VA = $3,938.58/month, all tax-free, but no benefit from the retirement system at all. With CRSC, the $1,200 combat-related amount is restored, tax-free, on top.
Worked example: CRDP wins for a 20-year length-of-service retiree
Veteran: Air Force MSgt (E-7), 20 years service, retired in 2020 at full eligibility. VA conditions: sleep apnea 50% (secondary to PTSD), PTSD 30% (in-theater service in Iraq but not combat-related under CRSC standards — diagnosed post-deployment, no combat exposure documented), tinnitus 10%, lumbar strain 10% (non-combat), hypertension 10% (secondary to PTSD). VA combined rating: 70%.
Retired pay: $3,200/month gross. Eligible for CRDP because 20+ years AND rating 50%+. CRDP fully restored 2026.
VA compensation 70% (married, two children): approximately $2,113.45/month.
CRDP option:
| Income source | Monthly | Tax status |
|---|---|---|
| Retired pay (CRDP, fully restored) | $3,200 | Taxable |
| VA disability compensation | $2,113.45 | Tax-free |
| Total gross | $5,047 |
Federal tax on $3,200 CRDP at 22% marginal: roughly $704/month. After-tax total: $5,047 - $704 = $4,343/month.
CRSC option: CRSC board reviews disabilities. PTSD diagnosed post-deployment, not combat-related under the four categories. Sleep apnea secondary to non-combat PTSD = not combat-related. Tinnitus combat-equivalent (range duty, aircraft maintenance) = combat-related, 10%. Lumbar strain non-combat. Hypertension secondary to non-combat PTSD = not combat-related.
Combat-related rating under CRSC: 10% only. CRSC monthly payment at 10% (no dependents counted in CRSC formula): approximately $175/month tax-free.
| Income source | Monthly | Tax status |
|---|---|---|
| Retired pay (full waiver in place) | $3,200 - $2,113.45 = $1,086.55 | Taxable |
| CRSC | $175 | Tax-free |
| VA disability | $2,113.45 | Tax-free |
| Total gross | $3,375 |
Federal tax on $1,353 retired pay at 22%: $298/month. After-tax total: $3,375 - $298 = $3,077/month.
Election result: CRDP after-tax $4,343 vs CRSC after-tax $3,077. CRDP wins by $1,266/month. The veteran selects CRDP in the DFAS open season.
Common errors
- Not applying for CRSC. CRDP is automatic; CRSC is not. Retirees with combat-related disabilities often leave money on the table by never filing DD Form 2860.
- Assuming combat deployment = combat-related under CRSC. Combat-related has a specific four-category meaning. PTSD diagnosed after a combat deployment is not automatically combat-related; the underlying stressor must tie to one of the four categories.
- Choosing the wrong election in December. Run the after-tax math each year. Promotions, marginal-bracket changes, and rating increases shift the breakeven.
- Confusing CRSC with CRDP on the 1099-R. DFAS reports only taxable amounts. CRSC will not appear on the 1099-R; CRDP will. A change in election between years can make the 1099-R amounts shift significantly.
- Reservists missing CRSC eligibility before retired pay starts. Reservists are eligible for CRSC only after they begin receiving retired pay (typically age 60). Apply once retired pay begins.
Sources cited in this article
- 10 USC 1413a — Combat-Related Special Compensation
- 10 USC 1414 — Members eligible for retired pay who are also eligible for veterans' disability compensation
- 38 USC 5305 — Waiver of retired pay
- 26 USC 104 — Compensation for injuries or sickness
- DoD Financial Management Regulation Volume 7B, Chapters 63 and 64 (CRSC and CRDP computation).
- DD Form 2860 (Claim for Combat-Related Special Compensation).
- National Defense Authorization Act for Fiscal Year 2004, Pub. L. 108-136 (CRDP enactment).
- National Defense Authorization Act for Fiscal Year 2008, Pub. L. 110-181 (CRSC expansion to medical retirees).
VetDisabilityCalc is an independent reference site. We are not VA-accredited and we do not prepare or present VA, DFAS, or service-board claims. This guide is reference material and is not legal or tax advice. Consult an accredited representative, CPA, or attorney for individual concurrent-receipt elections.