VA Pension, Military Retirement, and Combat Pay
VA Pension, military retirement, and combat pay are three separate benefits that veterans and families often confuse, because all three pay out monthly. Each has its own rules. This guide explains each in plain English. VA Pension is a needs-based benefit for wartime veterans with limited income and net worth. Military retirement comes from the Department of Defense and is earned through years of qualifying service. CRSC and CRDP are two combat-pay restoration programs that can restore or increase retired pay for certain combat-related injuries or service-connected disabilities. This guide walks through eligibility, how the benefits interact, and which payments you may be owed.
Which of these might apply to you?
-
Wartime service + low income → VA Pension At least 90 days active duty (24 months if enlisted after Sept 7, 1980), one day during a wartime period, age 65+ or permanently disabled, income below MAPR, net worth under $163,699.
-
20+ years of military service → Military retirement (DoD) Pay from DoD via DFAS, calculated by years of service. Tax matters; combat doesn't matter for the base check.
-
Military retirement + VA disability rating 50%+ → CRDP path Restores the dollar-for-dollar offset that used to reduce retirement pay by the VA disability amount. Auto-enrolled.
-
Any military retiree with combat-related disability 10%+ → CRSC path Tax-free monthly payment for the combat-related portion of disability. Application required (DD Form 2860).
More than one can apply. Most retirees end up on either CRDP or CRSC (you can't take both at once), and VA Pension is rare for retirees because military retirement counts as income against the pension limit.
1. VA Pension (the needs-based program)
VA Pension is a monthly check from the Department of Veterans Affairs paid to low-income wartime veterans who are 65 or older or permanently disabled. It is not related to a service-connected disability and it is not the same as VA disability compensation. You cannot draw both at the same time. VA pays the higher of the two.
Eligibility checklist
- Wartime service. At least 90 days active duty (24 months if enlisted after Sept 7, 1980), with at least one day during a wartime period.
- Discharge under conditions other than dishonorable.
- Age 65+, OR permanently and totally disabled, OR receiving SSDI/SSI, OR a patient in a nursing home for long-term care.
- Net worth under $163,699 (income + assets, with primary home and one acre excluded). FY 2026 limit, in effect Dec 1, 2025 – Nov 30, 2026.
- Countable income below MAPR. See table below.
Wartime periods (Congressionally defined)
| War / Conflict | Begin | End |
|---|---|---|
| World War II | Dec 7, 1941 | Dec 31, 1946 |
| Korean conflict | Jun 27, 1950 | Jan 31, 1955 |
| Vietnam era (in-country) | Feb 28, 1961 | Aug 4, 1964 (then below) |
| Vietnam era (general) | Aug 5, 1964 | May 7, 1975 |
| Gulf War | Aug 2, 1990 | open (no end date set) |
Source: VA wartime periods.
FY 2026 MAPR rates (Dec 1, 2025 – Nov 30, 2026)
MAPR is the Maximum Annual Pension Rate. VA pays you the gap between MAPR and your countable annual income.
| Veteran status | Without A&A or Housebound | With Housebound | With Aid & Attendance |
|---|---|---|---|
| Single, no dependents | $17,441 | $21,312 | $29,094 |
| With 1 dependent | $22,839 | $26,710 | $34,494 |
| Two married vets, both A&A | - | - | $46,143 |
| Two married vets: one A&A, one Housebound | - | - | $38,350 |
Source: VA pension rates. Add about $2,975 per additional dependent. Verify against VA.gov for your exact configuration.
Aid & Attendance vs Housebound (you can only get one)
For who qualifies for each increase, the 2026 amounts, the application forms, and how pension A&A differs from SMC aid and attendance, see the dedicated Aid and Attendance pension page.
Aid & Attendance
You need help from another person with daily activities (bathing, dressing, eating, toileting), OR you are bedridden, OR you are a patient in a nursing home, OR your eyesight is severely impaired (5/200 visual acuity or worse, or 5° concentric field).
Housebound
You are substantially confined to your home (or the immediate premises) due to permanent disability. Lower pay than A&A but easier to qualify.
How payment is calculated
Take MAPR. Subtract your countable annual income (most income, including Social Security, but you can deduct unreimbursed medical expenses). The result is your annual VA Pension. Divide by 12 for monthly.
Net worth and the 36-month look-back
Net worth includes most assets plus annual income. The primary home (with up to one acre) and a vehicle are excluded. The 2026 limit is $163,699.
Quick MAPR calculator
Estimate your annual pension. This is pure MAPR math, not an eligibility determination.
Only the portion of UME above 5% of your MAPR is deductible (per 38 CFR §3.278). For a single A&A vet, that 5% threshold is $1,454. Source: VA pension rate methodology.
Old Law Pension, Section 306 Pension, and Special Monthly Pension
Three pension programs have existed over the decades. The current Pension program (called Improved Pension) replaced two earlier ones in 1979. A small population of veterans and survivors still receives the older versions at protected rates.
| Program | In effect | Status today |
|---|---|---|
| Old Law Pension | Before July 1, 1960 | Closed to new applicants. Existing recipients kept on fixed protected rates. |
| Section 306 Pension | July 1, 1960 – Dec 31, 1978 | Closed to new applicants. Existing recipients kept on fixed protected rates. |
| Improved Pension (covered above) | Jan 1, 1979 – present | Current program. All new applications go here. |
- Audience: Mostly elderly survivors of WWII, Korea, and early Vietnam veterans who began drawing pension before 1979 and never elected to switch.
- Switch is irreversible. Old Law and Section 306 recipients can elect to move to Improved Pension at any time. The switch usually pays more (Improved has the A&A and Housebound add-ons) but it is one-way: you cannot switch back.
- Special Monthly Pension in this context = the A&A or Housebound add-on under Section 306 or Old Law rules. It uses different fixed-rate logic than the Improved Pension version. Current protected rates.
2. Military retirement pay (from DoD, not VA)
Military retirement is paid by the Department of Defense through the Defense Finance and Accounting Service (DFAS). It is completely separate from VA. There are two main flavors.
Length-of-service retirement
20+ years active duty, or 20 "good years" Reserve/Guard. Pay = (years × multiplier) × base pay average. Which exact formula depends on when you entered (Final Pay, High-3, REDUX, or Blended Retirement System).
Chapter 61 disability retirement
Service-issued retirement when DoD finds you unfit for continued duty AND assigns a disability rating of 30% or higher. Doesn't require 20 years. Pay calculated on the higher of years-of-service OR disability percentage.
Tax treatment
- Length-of-service retirement: taxable as ordinary income (federal, state varies, with about 30 states fully exempting military retirement and others partially).
- Chapter 61 retirement: the portion equal to your VA disability rating is excludable under Internal Revenue Code §104(a)(4). Example: a 60% Chapter 61 retiree pays tax only on the over-60% portion of their pay.
The historical "VA waiver" offset
Before 2003, federal law (10 USC §1414) prohibited drawing full military retirement and full VA disability at the same time. DoD reduced retirement pay dollar-for-dollar by the VA disability amount. That reduction is called the "VA waiver". Veterans gave up retirement pay to get tax-free VA disability because the math usually worked out.
Two programs now restore that waiver for many retirees: CRDP and CRSC.
Reserve and National Guard nuances
Reserve and Guard retirement runs on a different track:
- 20 "good years" are required to qualify (a year with 50+ retirement points), per 10 USC § 12731. A good year is not the same as a full year of active duty.
- Pay starts at age 60, not at retirement. The window between hitting 20 good years and starting to draw pay is called the Gray Area Retiree period.
- Reduced age for post-9/11 mobilizations: under § 12731(f), every 90 days of qualifying active service in a fiscal year shaves 90 days off the age-60 trigger. Floor is age 50.
- Notice of Eligibility (NOE) is the document the Service issues at the 20-good-year mark. Keep it. It's how DFAS confirms eligibility.
Sanctuary protection (the 18-year rule)
If a servicemember is within 2 years of retirement (i.e., has 18+ years of active service), they cannot be involuntarily separated. The Service must retain them through the 20-year mark.
- Active component enlisted: 10 USC § 1176. Service must keep the member on active duty until they qualify for retirement.
- Active component officers: 10 USC § 12646 applies the same retention rule.
- Reserve / Guard on active orders: If a Reservist on Title 10 mobilization crosses 18 years of cumulative active service, Sanctuary kicks in. The Service must keep them on active duty until 20-year retirement, OR get a written Sanctuary waiver from the member declining the right.
Source: DFAS Gray Area Retirees.
3. CRDP: Concurrent Retirement and Disability Pay
CRDP restores the VA waiver dollar-for-dollar. If you qualify, you receive your full military retirement plus your full VA disability with no offset.
Eligibility
- 20 or more creditable years of military service, AND
- VA disability rating of 50% or higher (any cause, doesn't have to be combat-related)
How to apply
You don't. CRDP is automatic. DoD and VA share data, DFAS confirms eligibility, and your retirement pay is restored without any action on your part.
Tax treatment
CRDP is taxable. It is restored military retirement pay, so it is taxed the same as your regular retirement pay.
Chapter 61 retirees: the years-of-service cap
Source: DFAS CRDP overview.
4. CRSC: Combat-Related Special Compensation
CRSC is a tax-free monthly payment for retirees whose VA-rated disability is combat-related. Unlike CRDP, CRSC is available even to medical retirees with fewer than 20 years of service.
What counts as "combat-related"?
A disability qualifies if it was incurred in any of these four ways (per 10 USC §1413a):
- As a direct result of armed conflict (combat, peacekeeping, or under direct enemy fire)
- While engaged in hazardous service (parachute duty, demolition, flight ops, diving)
- Caused by an instrumentality of war (combat vehicle, weapon, exposure to Agent Orange, burn pit smoke, contaminated water at Camp Lejeune, etc.)
- Incurred under conditions simulating war (combat training exercises, live-fire exercises)
Eligibility
- Any military retiree, including Chapter 61 medical retirees with fewer than 20 years
- VA disability rating of 10% or higher that is combat-related
- Receiving military retired pay from DFAS
How to apply
Submit DD Form 2860 to your branch of service (not to DFAS, not to VA). Each branch has its own CRSC review board:
- Army: U.S. Army Human Resources Command CRSC Branch
- Navy & Marine Corps: Department of the Navy CRSC Board (one board for both)
- Air Force & Space Force: Air Force Personnel Center CRSC Board
- Coast Guard: Coast Guard PSC CRSC
Tax treatment
CRSC is tax-free. The statute (10 USC §1413a) makes it explicitly excludable.
Source: DFAS Apply for CRSC.
5. CRDP vs CRSC: the choose-one rule
If you qualify for both programs, you must elect one. You cannot receive both at the same time. The election happens during an annual open season.
Side-by-side comparison
| CRDP | CRSC | |
|---|---|---|
| Tax treatment | Taxable | Tax-free |
| Combat connection | Not required | Required (10%+ combat-related) |
| Years of service | 20+ required | Any (incl. <20 Chapter 61) |
| VA rating threshold | 50% or higher | 10% or higher |
| Application | Automatic, no form | DD Form 2860 to your branch |
| Restores VA waiver | Up to 100% of waiver | Up to combat-related % |
| Filing deadline | None | 6 years from VA decision or retirement |
Annual open season: January 1–31
If you are eligible for both, DFAS sends a comparison letter each December showing what each program would pay you. You have January 1 through January 31 to elect or change. Outside the open season, your election locks in.
Source: DFAS CRDP/CRSC comparison page.
6. How the three checks interact
Pay close attention to which agency cuts each check. Veterans often get confused because the names overlap.
Visual: where each dollar comes from on a typical retiree's pay stub
Key interaction rules
- You cannot draw VA Pension and VA disability compensation at the same time. VA pays the higher of the two (38 CFR §3.700).
- Military retirement counts as countable income against VA Pension. So a vet receiving even modest military retirement usually exceeds the MAPR and gets no VA Pension.
- VA disability compensation is never offset regardless of your CRDP/CRSC election. It always pays in full.
- CRDP and CRSC are mutually exclusive. Pick one per year during the January open season.
Tax matrix
| Income source | Federal tax |
|---|---|
| VA Pension | Tax-free |
| VA disability compensation | Tax-free |
| Military retirement (length-of-service) | Taxable |
| Chapter 61 disability retirement | Partially excludable (the disability % portion) |
| CRDP | Taxable |
| CRSC | Tax-free |
State tax treatment varies. Many states fully exempt military retirement. Some don't. Check your state.
7. BDD claims and the DFAS audit
This section is for one specific situation: you filed a VA disability claim through Benefits Delivery at Discharge (BDD) while also retiring after 20+ years, or you were medically retired through MEB/PEB. Some months after your first retired-pay check, DFAS runs an "audit" of your account and sometimes sends a debt letter. This is not random. It's a predictable, mechanical result of two systems (VA and DFAS) that don't talk to each other in real time.
Why the audit happens
A BDD claim's effective date is the day after separation, which for a retiree is also day one of retired status (see the effective date trap). But VA usually doesn't finish rating the claim until weeks or months after that date. During that gap, DFAS has no idea a VA rating is coming, so it keeps paying full, un-reduced retired pay.
When the VA decision finally posts, VA and DFAS exchange the data, and DFAS opens an account audit to figure out what your retired pay should have been from day one of retirement forward, given the VA waiver rule and whether CRDP or CRSC applies. The audit is DFAS reconciling the gap, not an accusation of wrongdoing.
Three outcomes, once the audit runs
| Your situation | What the audit finds | Bottom line |
|---|---|---|
| 20+ years, rating 50%+ (CRDP-eligible) | You were owed full retired pay plus full VA compensation the whole time. The gap-period overpayment and the CRDP restoration mostly cancel out. | Usually low-drama. Small reconciling adjustments, rarely a real debt. |
| Combat-related, 10%+, CRSC already on file | Same logic as CRDP: the CRSC restoration offsets most or all of the waiver for the gap period. | Low-drama if your CRSC application (DD Form 2860) was already approved before the gap. If not yet filed, see below. |
| Under 50%, not combat-related, or CRSC not yet filed | The VA waiver genuinely applies from day one. You were overpaid retired pay for every month between retirement and when DFAS caught up. | DFAS creates a real debt for the overpaid months, usually recouped from future retired pay checks. |
Timeline
Rough order of events, in practice:
- 180 to 90 days before separation: BDD claim filed.
- Day after separation: retirement starts, VA effective date attaches, but the rating decision usually isn't final yet. Full retired pay continues.
- Weeks to a few months post-separation: VA finalizes the rating (BDD's goal is 30 days after separation, but exam scheduling and claim complexity commonly push this longer).
- After the rating posts: VA and DFAS exchange data, and DFAS opens the audit. This step has no fixed deadline and can itself take additional weeks or months.
- Audit resolves: either your pay adjusts going forward with no drama (CRDP/CRSC covers the gap), or you receive a debt letter for the overpaid gap period.
Separately, note that retroactive payments of any kind (from either VA or DFAS) are generally capped at 6 years back under the federal Barring Act, a ceiling that rarely matters for a fresh BDD claim but can matter if a dispute drags on for years.
Other gotchas
- SBP premiums don't shrink with your check. Your Survivor Benefit Plan premium is based on the base amount you elected at retirement, not your current post-waiver pay. If the waiver reduces your retired pay, the SBP deduction stays the same dollar amount, so it becomes a bigger bite out of a smaller check. This isn't a DFAS error, it's how SBP is designed.
- Your VA check is never touched. The waiver only ever reduces the DoD/DFAS side. VA disability compensation always pays in full, tax-free, regardless of what DFAS is reconciling.
- Reserve/Guard "gray area" retirees whose pay hasn't started yet (drawing at age 60, see Reserve and National Guard nuances) don't face this audit on retirement day, there's no retired pay yet to offset. The reconciliation happens later, when pay actually starts.
- Chapter 61 (medical) retirees have the CRDP years-of-service cap described above, so an audit for a Chapter 61 retiree can look confusing even when the math is correct, the cap isn't a simple dollar-for-dollar match.
- A debt letter is not automatically correct. Verify it. Compare the letter's monthly figures against your VA decision letter's effective date and your DFAS Retiree Account Statement (myPay) for the same months before assuming the number is right.
What to do
- Keep your paperwork. Your VA rating decision letter (with the effective date) and every myPay Retiree Account Statement or LES from the gap period. You'll need both if you ever have to dispute a number.
- File CRSC early if it applies to you. Don't wait for the audit. Submit DD Form 2860 to your branch as soon as you have a VA rating in hand, since board review alone can take months.
- If months pass with no adjustment, you can proactively contact DFAS Retired & Annuitant Pay rather than wait for a surprise letter.
- If you get a debt letter you believe is wrong, dispute it in writing and ask DFAS for the computation (which months, what rate, what offset was applied).
- If the debt is correct but repayment would be a hardship, you can request relief with DD Form 2789 (Waiver/Remission of Indebtedness Application), filed with a supporting debt computation. If denied, you can appeal in writing.
Getting help
- DFAS Retired & Annuitant Pay: (800) 321-1080 or (317) 212-0551, or submit documents through askDFAS.
- myPay account issues: (888) 332-7411.
- Your VA rating itself (the claim, evidence, or appeal): an accredited representative can help. Find a free VSO representative.
- CRSC applications go to your branch's CRSC board (see CRSC, section 4), not to DFAS.
Sources: DFAS: VA Waiver and Retired Pay · DFAS: Retired Military Debt Waivers · DFAS Retired Military contact directory.
8. State tax treatment of military retirement (FY 2026)
Military retirement pay is always taxable at the federal level (with the Chapter 61 exception). State treatment varies and has shifted dramatically over the last decade. As of 2026, only California and Washington D.C. tax military retirement pay as ordinary income with no special break. Every other state either has no income tax or provides a full or partial military retirement exemption.
The table below classifies each state into one of four buckets. Click a column header to sort.
| State | Treatment | Notes |
|---|
Sources: Military Wallet 2026 state tax, Military Retirement Tax by State, Military.com. Always verify with your state's department of revenue. Some partial-exemption states have age, income, or rank thresholds that change which veterans qualify.
9. Survivors
The survivor side has three programs. Quick map:
- Survivors Pension: needs-based, for low-income surviving spouses or unmarried children of deceased wartime veterans. Same MAPR-style logic. Current rates.
- DIC (Dependency and Indemnity Compensation): flat monthly payment to surviving spouse or children when the veteran's death was service-connected. See our DIC guide.
- SBP (Survivor Benefit Plan): DoD annuity the retiree elects from their own retirement pay (typically 55% of the retiree's pay if elected at full coverage).
The "Widows Tax" repeal: SBP-DIC offset is gone
Before 2021, a surviving spouse who qualified for both SBP and DIC had her SBP annuity reduced dollar-for-dollar by the full DIC amount. Advocacy groups called this the "widows tax". Congress repealed it in the FY 2020 NDAA with a 3-year phase-in:
| Effective | SBP reduction |
|---|---|
| Before 2021 | Full DIC offset (entire DIC subtracted from SBP) |
| Calendar year 2021 | Reduced by no more than 2/3 of DIC |
| Calendar year 2022 | Reduced by no more than 1/3 of DIC |
| January 1, 2023 onward | No offset. Surviving spouse receives both SBP and DIC in full. |
Sources: DoD SBP-DIC Offset Repeal FAQ · MOAA SBP-DIC offset resources.
10. Forms reference
- VA Form 21P-527EZ: Veterans Pension application VA.gov →
- VA Form 21P-0969: Income and Asset Statement in Support of Claim for Pension VA.gov →
- VA Form 21-2680: Examination for Household Status or Permanent Need for Aid & Attendance VA.gov →
- VA Form 21P-534EZ: Survivors Pension / DIC application VA.gov →
- DD Form 2860: CRSC claim (filed with your branch of service) DFAS →
- DD Form 2789: Waiver/Remission of Indebtedness Application (dispute or seek relief from a DFAS debt) Form (PDF) →
11. Frequently asked questions
I'm getting military retirement and VA disability. Which one is bigger?
I served Vietnam era but only 60 days. Do I qualify for VA Pension?
Can I switch from CRDP to CRSC mid-year?
Does my Social Security count against VA Pension?
Are burn pit illnesses "combat-related" for CRSC?
I got a DFAS debt letter a few months after I retired and filed BDD. Did I do something wrong?
I'm a Chapter 61 retiree with 12 years of service. Can I get CRDP?
I'm a 100% disabled vet, age 67, never served during a wartime period. VA Pension?
Can my spouse get Aid & Attendance based on my benefits?
Sources
- VA Pension rates (FY 2026 MAPR): current MAPR table
- VA Pension eligibility: wartime, age, and disability rules
- VA Pension FAQ (PDF, April 2025): net worth, look-back, countable income
- DFAS CRDP overview
- DFAS Apply for CRSC: DD Form 2860 process
- DFAS CRDP vs CRSC comparison
- DFAS: VA Waiver and Retired Pay: how the audit and waiver mechanics work
- DFAS: Retired Military Debt Waivers and Remissions: DD Form 2789 process
- 38 CFR §3.700: concurrent receipt of pension and compensation
- 38 CFR §3.750: entitlement to concurrent military retired pay and disability compensation
- VA: how are pension and disability compensation different?
This page is an educational guide, not legal or tax advice. Pension, retirement, and combat-pay rules contain edge cases that depend on individual facts. For help with your specific claim or election, find a VSO representative. Related tools: VA Math calculator · DIC guide · Letter Interpreter.