Can You Get VA Disability and Military Retirement Pay at the Same Time?

Military retirees who also have a VA disability rating often ask the same question: do I get both? The answer depends on your rating, how you retired and whether your disabilities are combat-related. Here is how the offset works and the two programs that restore it.

The starting point: the VA waiver

By law, a military retiree who wants VA disability compensation must waive an equal amount of military retired pay (38 U.S.C. § 5305). On its own, that means the total doesn't go up: every dollar of VA compensation replaces a dollar of retired pay. The benefit is taxes — VA compensation is not taxable, while retired pay generally is — so even a fully offset VA award lowers your tax bill.

Two programs, often called concurrent receipt, restore some or all of the waived retired pay: Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC).

CRDP: for ratings of 50% or higher

CRDP restores the retired pay that would otherwise be offset, so you receive both payments in full. You qualify if you're a military retiree (active duty with 20 or more years of service, or a reserve retiree at age 60) and have a combined VA rating of 50% or higher. Members retired for disability under Chapter 61 must also have at least 20 years of service. CRDP was phased in over several years and the phase-in was completed in 2013. It's paid automatically by DFAS, and it is taxable because it is restored retired pay.

CRSC: for combat-related disabilities at any rating

CRSC is a separate, tax-free payment for retirees whose VA-rated disabilities are combat-related — for example, injuries from armed conflict, hazardous duty, training that simulates war, or an instrumentality of war — or who received a Purple Heart. There's no 50% minimum. Unlike CRDP, you must apply through your service branch, which decides which disabilities are combat-related. CRSC is not taxable.

You can't receive CRDP and CRSC at the same time. If you qualify for both, DFAS sends an annual letter showing both amounts, and you can change your election during the open season each January (January 1–31 in 2026).

Worked examples: an E-7 retired at 20 years

Take an E-7 who retired at 20 years with a High-3 average of $6,118.50, for a High-3 pension of $3,059.25 a month. The VA amounts are 2026 rates for a veteran alone.

The 40% non-combat case shows the offset clearly: the total stays at $3,059.25, but $795.84 of it becomes tax-free. Crossing to 50% changes the picture — CRDP adds the full $1,132.90 on top of retired pay. For simplicity these examples ignore Survivor Benefit Plan premiums and assume CRSC restores the full offset, which it does when all rated disabilities are combat-related.

Why the 50% line matters so much

The jump at 50% is larger than the rate tables alone suggest. In the example above, moving from a 40% to a 50% rating raises VA compensation by $337.06 a month, but total income rises by $1,132.90 — because CRDP starts restoring the retired pay that had been offset. That makes an accurate combined rating especially important for retirees near the threshold. VA math rounds to the nearest 10, so a combined value of 45 becomes 50% while 44 stays at 40%; the VA math guide shows how those values are reached.

Retirees below 50% whose disabilities aren't combat-related still gain from the waiver through lower taxes. For someone in the 12% federal bracket, making $795.84 a month tax-free saves roughly $1,146 a year in federal income tax, before any state tax savings.

Where to see the numbers

Retirees can see the effect on their monthly retiree account statement from DFAS, which shows gross retired pay, the VA waiver amount and any CRDP or CRSC being paid. VA compensation appears separately in VA's payment history. Comparing the two each January, after the cost-of-living adjustment, is a simple way to confirm everything is being paid correctly.

What about BRS and early separation?

• Blended Retirement System retirees follow the same offset and concurrent receipt rules for their retired pay.
• Members who separate before retirement with no retired pay have no offset; they receive VA compensation in full.

Taxes and retroactive ratings

Because VA compensation isn't taxable, DFAS reports only the taxable portion of retired pay on Form 1099-R. When VA awards a rating retroactively, part of the retired pay you already reported as taxable can become tax-free for those earlier years. The IRS allows amended returns in that situation and gives extra time to file them.

Steps to take

1. File your VA disability claim; the waiver is coordinated between VA and DFAS once you're awarded compensation.
2. If your combined rating is 50% or higher, confirm CRDP starts on your retiree account statement.
3. If any disability is combat-related, apply for CRSC with your branch, even at ratings below 50%.
4. If you qualify for both programs, compare the amounts in DFAS's annual letter and change your election during the January open season if needed.
5. After any retroactive award, review whether amended tax returns make sense.

Estimate your combined rating and compensation with the VA disability calculator, and your pension with the military retirement calculator.

Sources

• 38 U.S.C. § 5305 — Waiver of retired pay
• DoD Military Compensation — CRDP and CRSC
• DFAS — 2026 CRDP/CRSC open season FAQs
• IRS Publication 907 — VA disability benefits not taxable
• IRS — Disabled veterans pension income FAQ
• VA.gov — Current disability compensation rates
• DFAS — 2026 military pay tables

MilPayLab is not affiliated with, endorsed by, or connected to the U.S. Department of Defense, DFAS, DTMO or the Department of Veterans Affairs. Figures are taken from published government rate tables and are provided for information only, not as financial, legal or tax advice. Your finance office, your LES and your VA decision letter are the final word on what you are paid.