Military retirees with a combined VA disability rating of 50% or higher are eligible for Concurrent Retirement and Disability Pay (CRDP). Those with a combat-related disability may also be eligible for Combat-Related Special Compensation (CRSC). You cannot receive both at the same time. Most veterans who have both options available are making the wrong choice — and leaving money on the table.

The Background: The Offset Problem

For most of military history, veterans who received both military retirement pay and VA disability compensation had their retirement pay reduced dollar-for-dollar by the amount of VA compensation they received. The rationale was that both payments came from federal funds and covering the same period of service. CRDP and CRSC were created to eliminate or reduce this offset for eligible veterans — allowing them to receive both retirement pay and VA compensation without the full reduction.

What CRDP Is and Who Qualifies

Concurrent Retirement and Disability Pay restores the retirement pay that was previously offset by VA disability compensation. CRDP is available to military retirees who have a combined VA disability rating of 50% or higher. It is not a separate payment — it is a restoration of retirement pay that was withheld. Because restored retirement pay is taxable income (unlike VA disability compensation), CRDP payments are subject to federal income tax.

CRDP is automatic for eligible retirees. If you have a 50%+ combined VA rating, DFAS automatically begins the restoration without you needing to apply. The amount restored depends on your disability rating — higher ratings restore more retirement pay.

What CRSC Is and Who Qualifies

Combat-Related Special Compensation provides monthly payments specifically to military retirees whose disabilities are combat-related. Unlike CRDP, CRSC is not a restoration of retirement pay — it is a separate compensation for combat-related conditions. Because it is a disability compensation rather than retirement pay, CRSC is not taxable income.

CRSC eligibility requires: military retirement, a VA disability rating for a combat-related condition, and an application to your branch’s CRSC board. CRSC is not automatic — you must apply. The branch CRSC board determines which of your disabilities qualify as combat-related, which may differ from your overall combined VA rating.

How to Calculate Which Pays More

The calculation depends on your specific retirement pay amount, VA disability compensation, and which disabilities qualify as combat-related under the CRSC rules.

CRDP amount = the portion of your retired pay previously offset by VA disability compensation that gets restored. For a veteran rated 80% with a $2,000/month retirement pay and $2,044.89/month VA compensation, CRDP restores retirement pay up to the amount of the offset.

CRSC amount = a payment equal to the VA compensation rate for your combat-related disability rating, up to the amount of your retired pay. If only 50% of your 80% combined rating is classified as combat-related, your CRSC payment is calculated at the 50% rate ($1,102.04/month), not the 80% rate.

The key variable: CRSC is tax-free while CRDP is taxable. At higher retirement incomes and higher tax brackets, CRSC’s tax advantage can close the gap significantly. Run the after-tax numbers before deciding.

When CRSC Typically Wins

CRSC tends to produce higher net income when: a significant portion of your disabilities are combat-related and thus eligible for the full CRSC rate, you are in a higher federal tax bracket (meaning the tax-free nature of CRSC matters more), your retirement income is lower (meaning CRDP restores less), or you live in a state that taxes retirement income but not disability compensation.

When CRDP Typically Wins

CRDP tends to produce higher net income when: only a small portion of your VA rating is combat-related (limiting CRSC to a lower rate), your federal tax rate is low (minimizing CRSC’s tax advantage), or your retirement pay offset is large and the full restoration under CRDP exceeds the CRSC payment amount.

How to Switch

You can switch between CRDP and CRSC once per year during open season (typically October through December) or immediately following a rating change that affects your eligibility. To switch to CRSC, apply to your branch CRSC board. To switch to CRDP, notify DFAS. An accredited VSO can help you run the numbers and time the switch strategically.

Frequently Asked Questions

Can I receive both CRDP and CRSC?
No. You must elect one or the other. You can switch once per year or following a qualifying rating change.

Is CRSC taxable?
No. CRSC is treated like VA disability compensation and is not taxable income. CRDP is taxable as retirement pay.

Is CRDP automatic?
Yes, for retirees with a 50%+ combined VA rating. DFAS processes it without a separate application. CRSC requires an application to your branch board.

Does a VA rating change affect my CRDP or CRSC?
Yes. A rating increase typically increases your CRDP amount. It may or may not increase your CRSC amount depending on whether the newly rated conditions are combat-related. Review your election whenever your VA rating changes.