Updated August 2, 2026. Quick answer: if you receive both military retired pay and VA disability compensation, your retired pay is cut dollar for dollar by the VA amount. Two programmes give that money back — CRDP and CRSC — and you may receive one or the other, never both. The difference that usually decides it: CRDP is taxable and CRSC is not.
How we read these rules. DFAS blocks automated access to its website, so the quotations below were taken from archived captures of DFAS’s own pages rather than from a live read. The wording is DFAS’s. Because these are eligibility rules with money attached, confirm your own position against the current DFAS page or with DFAS directly before acting.
First, what the offset does
“The law requires that a military retiree waive a portion of their gross DoD retired pay, dollar for dollar, by the amount of their Department of Veterans Affairs (VA) disability compensation pay; this is known as the VA waiver (or VA offset).”
DFAS
The practical effect surprises people: VA compensation is tax-free, retired pay is not, so even a straight swap usually leaves a retiree better off. But it is a swap, not an addition — and that is what CRDP and CRSC exist to undo.
The two programmes side by side
| CRDP | CRSC | |
|---|---|---|
| What it is | Restores the retired pay the offset took | A separate tax-free entitlement paid alongside retired pay |
| Rating needed | Not less than 50 percent | At least 10 percent, and the disability must be combat-related |
| Do you apply? | No — it is automatic if you qualify | Yes — a separate application to your Branch of Service |
| Taxed? | Yes, as retired pay | No — tax-free |
DFAS states the CRDP threshold in these terms: a retiree must “have a service-connected disability (or combination of service-connected disabilities) that is rated by the Secretary of Veterans Affairs as not less than 50 percent disabling on the VA schedule for rating disabilities.” CRSC sets a far lower bar at 10 percent, but adds the combat-related requirement and the application.
The two things that cost people money
CRSC does not arrive by itself. CRDP is automatic; CRSC requires you to “file a CRSC application with your Branch of Service”. A retiree who qualifies for CRSC and never applies simply does not get it, and nobody chases them about it. That is the single most common way money is left behind in this area.
You must choose, and the choice is revisitable. DFAS is explicit that eligibility for both is possible but “you cannot receive both of them at the same time”, and it runs an annual open season for switching. Because CRSC is tax-free and CRDP is not, the larger gross figure is not automatically the better one — the comparison has to be made after tax, and the right answer can change when your other income changes.
What this page will not do
It will not tell you what rating you should have, whether a condition is combat-related, or how to pursue a claim. Those are decisions for the VA and your Branch of Service, and anyone offering confident answers about them from a distance is guessing. What is safe to say is procedural: if there is any argument that a disability is combat-related, the CRSC application is the step that preserves the option, and it costs nothing but the filing.
How this interacts with the rest of retired pay
The offset applies to retired pay, so it also shapes what an SBP base amount is measured against and what a survivor eventually receives. If both decisions are in front of you, take them together: what the survivor election costs and buys. And the underlying figure everything else works from: what retired pay actually comes to.
VA waiver, CRDP eligibility, CRSC eligibility and application, the not-both rule and the taxation comparison all from DFAS’s published pages, read via archived captures as described above. Read August 2026. General information, not advice. Nothing here addresses how disability ratings are determined or pursued, which is outside what this site covers.