You retired with a VA disability rating and you have a combat-related injury on your record. Now DFAS sends you two letters about CRSC and CRDP. Both pay money. Both are tied to your disability. You can only pick one. The pick is locked in for a full year. You only get to switch during a short window each January.

Picking wrong can cost you thousands of dollars over the year. It can also push you into a higher tax bracket if you stack civilian work on top. Most retirees lean on whatever DFAS auto-elects. That number can be off. The auto-pick does not account for your tax bracket or your civilian salary plan.

This guide walks through CRSC vs CRDP. We cover who qualifies for each. We cover what the law actually says. We cover how taxes change the math. And we cover how to switch your pick during open season. By the end you will know which one fits your situation.

What is CRSC and who qualifies?

CRSC stands for Combat-Related Special Compensation. The statute is Title 10 USC § 1413a. Congress set it up to fix one problem. Combat-injured retirees should not have to give up retired pay to get VA disability pay.

To qualify, you need to be entitled to retired pay and have a VA disability rating. The injury must be combat-related. The statute lists four ways an injury can count.

• Armed conflict: Direct result of combat with an enemy force.
• Hazardous service: Got hurt while doing hazardous duty. Dive ops, jumps, EOD, or flight duty all count.
• Training that simulates war: Live-fire drills, combat trauma training, field exercises with real risk.
• Instrumentality of war: Hurt by a weapon, vehicle, or tool of war. A Humvee rollover counts. Agent Orange exposure counts. A fall off a ladder in the barracks does not.

A Purple Heart is a qualifying pathway for the specific injury it was awarded for. Your branch still adjudicates which rated conditions tie back to that Purple Heart, so the application is not a formality. CRSC is tax-free. It does not show up on your W-2 or your 1099-R. And the IRS does not touch it.

One more thing the statute does not spell out but DFAS does. You have to apply for CRSC through your service branch. The VA does not handle it. DFAS does not handle the approval. Your branch reviews your records and decides if your injury fits the combat-related rules.

What is CRDP and who qualifies?

CRDP stands for Concurrent Retirement and Disability Pay. The statute is Title 10 USC § 1414. It also exists to fix the VA waiver problem. But the rules are different.

Before CRDP existed, the rule was simple but harsh. A retiree with VA disability gave up a dollar of retired pay for every dollar of VA pay. That offset was called the VA waiver. CRDP wipes out the waiver. You get both your full retired pay and your full VA disability pay at the same time.

To qualify for CRDP you need three things.

• Retired pay entitlement: You must be drawing military retired pay. Length-of-service or disability retired pay both count.
• VA rating of 50% or higher: The combined VA rating must be at least 50%. A 40% rating does not get you CRDP, even if every other rule passes.
• 20 years of service: Standard rule. Chapter 61 medical retirees with fewer than 20 years are excluded.

CRDP is taxable. It flows through your DFAS 1099-R as regular retired pay. Federal income tax applies. State income tax applies in any state that taxes military retirement. That tax bite matters a lot when you compare it to CRSC. We get into the math below.

CRDP is also automatic. You do not apply. If you hit the three rules above, DFAS turns it on for you. The phase-in that started in 2004 completed at the end of 2013. Full CRDP became effective January 1, 2014. There is no longer any reduced or partial CRDP. You either get the full amount or you do not qualify.

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Can you get both CRSC and CRDP?

No. Federal law lets you receive one of them in any given month. Not both. This is the rule that trips up most new retirees. They see two programs and assume the money stacks. It does not.

DFAS handles the choice by running a comparison every month. They look at what you would get under CRSC and what you would get under CRDP. Then they default you to whichever pays more in gross dollars. The official side-by-side is on the DFAS CRSC vs CRDP comparison page if you want the source.

That sounds great until you remember CRSC is tax-free and CRDP is taxed. A CRDP payment that is higher on paper can be lower in your pocket. Federal and state taxes pull from CRDP. They do not touch CRSC. That is the core decision behind the pick.

When can you switch your CRSC or CRDP election?

Once a year. DFAS runs the CRSC/CRDP open season every January. The 2026 open season ran January 1 through January 31, 2026. Open season is the only window when you can change which program you receive.

If you do nothing, your current election rolls over for the next year. If you want to switch, DFAS mails you a form in early December. You send it back with your choice before the end of January. Forms postmarked February 1 or later do not get processed.

Outside of open season, you cannot switch. If you find out in March that you picked wrong, you wait until next January. That is why running the math now matters. You are locking in 12 months of payments.

One exception. If your VA rating changes mid-year, that can shift which program pays more. DFAS still keeps your current election in place until open season. You do not get a mid-year do-over just because the math changed.

How do CRSC and CRDP compare side by side?

Two patterns show up here. CRSC has a stricter entry rule but a friendlier tax treatment. CRDP has an easier qualifying path but you pay tax on every dollar. The state you live in matters too. A retiree in Texas with no state income tax sees a smaller gap between the two. A retiree in California with state tax on retired pay sees a much wider one.

Want help running this for your own situation? Our military retirement and civilian pay calculator guide walks through the take-home math step by step. And our state-by-state guide to taxing military retirement shows which states leave your CRDP alone.

What about Chapter 61 medical retirees?

Chapter 61 is the rule that lets the military medically retire someone before they hit 20 years. The CRSC vs CRDP question gets simpler if you separated under Chapter 61 with under 20 years. CRDP is off the table.

The CRDP statute blocks Chapter 61 retirees with fewer than 20 years from receiving concurrent receipt. You can have a 100% VA rating and still get nothing under CRDP. The 20-year wall is hard.

CRSC is still on the table though. CRSC can recover some or all of the VA waiver if your medical retirement was tied to a combat injury. This is a big deal for younger Chapter 61 retirees. Many of them get told CRDP does not apply and they assume there is no fix. There is. It is just called CRSC.

One catch. Your CRSC as a Chapter 61 retiree gets capped. The cap is calculated from your actual years of creditable service. Your retired pay percentage times your years of service times your retired pay base. A 12-year Chapter 61 retiree gets a cap based on 12 years, not 20. CRSC also cannot exceed your VA waiver. Two limits stack on top of each other. Run the numbers with your branch before you assume CRSC will fully replace your VA waiver.

What does the tax math look like in real dollars?

This is where most retirees get the choice wrong. They see DFAS auto-elected the higher number and stop reading. When I was building my own post-Navy income plan, I learned the hard way that gross-dollar comparisons do not tell you what actually lands in your bank account. Same applies here. Now add taxes to the comparison.

Imagine a retiree with $30,000 a year in CRSC restoration and $32,000 a year in CRDP restoration. Gross, CRDP wins by $2,000. DFAS auto-elects CRDP. Now add taxes.

• CRSC after tax: $30,000. Tax-free is tax-free. You keep every dollar.
• CRDP at 22% federal bracket: $32,000 minus 22% federal tax. About $24,960 left.
• CRDP with 5% state tax on top: About $23,360 left.

The retiree picked the wrong one if they let DFAS auto-elect. CRSC nets $6,640 more after tax in this case. Multiply that across a 20-year retirement and you are looking at a meaningful number.

The math flips when CRDP is far larger than CRSC. A retiree with $40,000 CRDP and $15,000 CRSC will probably still come out ahead with CRDP. That holds even after taxes. The break-even point depends on your bracket and your state. The point is to run the numbers, not trust the default.

Does CRSC stack with a federal civilian salary?

Yes. CRSC is paid to you as a retiree, not as a federal employee. It does not get offset by your federal civilian salary. You collect your full GS-paid salary and your CRSC at the same time.

The same is true of CRDP. Both flow alongside a federal civilian paycheck. The catch with CRDP is the tax stacking. Your GS salary plus CRDP can push you into a higher federal bracket. The higher bracket means CRDP costs more in tax than it would on its own.

There is a separate rule for retirees who take a federal civilian job. It is called dual compensation. We cover that fully in our federal dual compensation guide. The short answer is most retirees do not get cut. But the rule is not the same as the CRSC and CRDP rules.

How do you apply for CRSC?

CRSC is the only one you have to apply for. Each branch runs its own CRSC office. Send your application to the branch you retired from. Your VA decision letters and service records do most of the work. But you have to put the package together yourself.

Once CRSC is approved, DFAS starts running the monthly comparison between CRSC and CRDP. Your branch decision letter tells you which of your rated conditions count as combat-related. The DFAS payment is based only on those approved conditions, not your full VA rating.

What mistakes do retirees make with CRSC and CRDP?

A few patterns show up over and over. Knowing them ahead of time saves you a lot of wasted money.

• Trusting the DFAS auto-pick: The default is gross dollars, not after-tax dollars. Run your own numbers before open season.
• Skipping the CRSC application: Many retirees with combat-related injuries never apply because no one tells them to. The VA does not handle it. TAP does not always cover it. You have to push the paperwork yourself.
• Assuming a 100% VA rating means CRSC is automatic: It does not. A 100% rating just means more conditions for your branch to review. Each one still needs a combat-related link.
• Forgetting open season: The form arrives in early December. People file it under "deal with later" and miss the January 31 deadline. Then they are locked in for a full year.
• Not checking after a VA rating bump: A new rating decision can change which program pays more. You cannot switch mid-year. But run the math right after the bump so you are ready for open season.
• Mixing up CRSC and VA disability pay: CRSC is paid by DFAS, not the VA. Your VA disability deposit and your CRSC deposit are two separate things on your bank statement. Some retirees only see one and think the other got missed.

One more pattern worth flagging. Chapter 61 retirees with under 20 years sometimes get told they cannot get concurrent receipt. They stop there and miss CRSC. CRSC is still open to them. If a Marine medically retired at 12 years with a combat injury rating, CRSC is the entire game. CRDP is irrelevant.

How does this fit with your bigger retirement plan?

Picking CRSC or CRDP is one piece of the retired-pay puzzle. The other pieces interact with it. SBP premiums come out of your retired pay first. If your retired pay is reduced to near zero by the VA waiver, DFAS deducts SBP premiums from your CRSC payment instead. State tax depends on where you live, which can change the after-tax winner. A civilian salary on top of retired pay changes your federal bracket.

If you are still building the rest of the plan, three of our guides cover the connected pieces.

• Our 2026 state guide on taxing military retirement shows which states leave CRDP alone and which states tax it.
• The SBP cost and coverage guide walks through the survivor benefit premium. SBP comes off the top of retired pay before anything else.
• Our best states for military retirees in 2026 rounds up cost of living, taxes, and quality of life.

Plan your civilian career while you are at it. Our careers after the military for retirees under 50 piece covers options beyond consulting and contracting. Once you pick a job to go after, BMR's federal resume builder tailors a 2-page federal resume from your retirement record. Free to use, no credit card.

What should you do before next open season?

Three actions before January.

First, pull your most recent DFAS pay statement and your VA decision letter. Write down your gross CRSC amount and your gross CRDP amount side by side. If you do not have a CRSC number yet, that is your sign to apply.

Second, run the after-tax math. Take your federal bracket. Add your state bracket if your state taxes military retirement. Apply both to the CRDP number. Compare what you keep to the CRSC number. The winner is the one you elect in January.

Third, set a calendar reminder for the first week of December. That is when DFAS mails the open season form. Run the math every year as a habit. Your civilian income, tax bracket, and VA rating can all shift over time.

Our tax tips guide goes deeper on bracket planning and withholding when military retired pay layers with a civilian salary. And if you carry a disability rating, our 2026 state property tax exemption guide shows where you can wipe out property tax on top.