Information verified through September 21, 2026.
The short answer. Special monthly compensation (SMC) can be included in your Combat-Related Special Compensation (CRSC), but only on a condition most retirees have never been told about. Under DoD Financial Management Regulation (FMR) Volume 7B, Chapter 63, your military department classifies each SMC award as either Combat-Related SMC (CR-SMC) or Non-Combat-Related SMC. Only CR-SMC enters the CRSC computation. And a second rule lets your branch skip that classification entirely when it would not change your payment — marking the award “undetermined combat-relatedness” and passing it to DFAS unresolved. That is why so many approved CRSC letters are silent on SMC. It is not a rejection. It is an open question, and it becomes worth money the day your numbers change.
Key takeaways
- SMC counts only as CR-SMC. FMR Vol 7B, Ch 63, ¶ 8.1.2: SMC is part of gross CRSC “only if the SMC is paid on the basis of disabilities determined by the Military Department to be combat-related.”
- The classification follows the diagnostic codes. Under ¶ 7.2 your branch classifies each SMC award “consistent with the corresponding determination of the diagnostic codes on which the SMC is based.”
- ¶ 7.3 is why your letter is silent. The department “need not” make the determination for anyone who would gain nothing from it. That SMC goes to DFAS as “undetermined combat-relatedness.”
- The dollars are not small. At 2026 rates, SMC-K adds $139.87 a month, and SMC-S pays $469.95 a month more than the straight 100 percent veteran-alone rate.
- The cap still governs. CRSC is the lesser of the gross amount and the retired pay you waived, with a longevity limit for Chapter 61 retirees. SMC raises your check only if that cap has room.
What SMC is, briefly
Special monthly compensation is a higher rate the VA pays on top of, or in place of, the ordinary percentage-based rate. It is authorized by 38 U.S.C. § 1114 and implemented at 38 CFR 3.350. Chapter 63 describes it the same way: SMC “is payable for anatomical loss or loss of use of specific organs or parts of the body as a result of service-connected disabilities” and “is payable in addition to the basic rate of compensation otherwise payable on the basis of degree of disability.”
The letters matter here, so a quick orientation. SMC-K is a flat add-on under § 1114(k) for each anatomical loss or loss of use of a hand, a foot, both buttocks, one or more creative organs, blindness of one eye having only light perception, deafness of both ears with absence of air and bone conduction, or complete organic aphonia — and a veteran may hold one to three of them. SMC-L through SMC-O are built from amputations, loss of use, blindness, aid and attendance, and being permanently bedridden, usually in combination. SMC-S is the housebound rate, payable under 38 CFR 3.350(i) where a single service-connected disability is rated 100 percent and there is either additional disability independently ratable at 60 percent, separate and distinct and involving a different bodily system, or the veteran is permanently housebound.
Those are VA decisions, made by the VA. Nothing in the preceding paragraph is a CRSC determination, and that distinction is the whole article.
The rule: SMC counts only if it is CR-SMC
Chapter 63 sets out the CRSC amount in section 8. Paragraph 8.1 defines the gross monthly amount as what the VA would pay you “if compensated solely for the disabilities determined to be attributable to an injury for which the member received the Purple Heart or determined to be otherwise combat-related.” Dependent rates come along with it under ¶ 8.1.1. Then comes the SMC rule:
Volume 7B, Chapter 63, paragraph 8.1.2: “The amount of SMC will be considered as part of gross CRSC compensation only if the SMC is paid on the basis of disabilities determined by the Military Department to be combat-related.”
Section 7 supplies the machinery. Paragraph 7.2 directs each military department to make a “special determination” about whether a member entitled to CRSC who also receives SMC under § 1114(k) through (s) could receive increased CRSC as a result. The department first asks whether all of the member’s VA-compensated disabilities have been found combat-related. Where the file is mixed — some combat-related, some not, which describes most retirees — the department classifies each SMC award as CR-SMC or Non-CR-SMC “consistent with the corresponding determination of the diagnostic codes on which the SMC is based.” It then notifies the DFAS Cleveland site, which, in the regulation’s words, “will include any CR-SMC in CRSC computations.”
So there is a live path from a VA SMC award to a larger tax-free CRSC check. It runs through a classification decision made by your branch, on the same diagnostic codes it already adjudicated, and it is per-award rather than all-or-nothing.
Why your award letter probably says nothing about SMC
Here is the paragraph almost nobody quotes, and it answers the question we get asked most on this subject:
Paragraph 7.3, “Grades Not Requiring SMC Determinations”: “The Military Department need not make a combat-related determination for any member who would not receive added compensation even if SMC was determined to be combat-related. Any SMC on such member will be passed to DFAS as ‘undetermined combat-relatedness.’”
Read that against the cap in ¶ 8.2. CRSC “may not exceed the current reduction in retired pay” caused by the VA waiver, and the amount is “the lesser of the gross CRSC from paragraph 8.1 or the reduction to the retired pay entitlement.” For Chapter 61 disability retirees, ¶ 8.5 applies a further longevity-based reduction on top of that. A great many approved retirees are sitting against one of those two ceilings. For them, adding SMC to the gross figure changes nothing, because the gross figure is not what is setting their payment. The branch is permitted to skip the question, and it does.
That is administratively sensible. It is also a quiet trap, for one reason: caps move. A longevity recomputation, a retroactive VA rating change, a corrected effective date, a Chapter 61 retiree whose comparison figure shifts — any of these can lift the ceiling and make the gross amount binding for the first time. At that moment the determination nobody made becomes the determination that decides your payment. And nobody goes back and makes it on their own initiative. If your file carries an SMC award marked “undetermined,” that is yours to resolve.
What it is actually worth
These are current VA rates, effective December 1, 2025, for a veteran with no dependents. Dependent rates run higher and carry into the CRSC computation under ¶ 8.1.1. The right-hand column is the gap over the straight 100 percent rate — the amount at stake if the award is classified CR-SMC and your cap has room.
| Level | What it rests on | 2026 monthly rate, veteran alone | Above the 100% rate |
|---|---|---|---|
| 100% (no SMC) | Schedular 100 percent | $3,938.58 | — |
| SMC-K | Flat add-on, 1 to 3 awards | $139.87 added | $139.87 per award |
| SMC-S | Housebound, or 100% plus separate 60% | $4,408.53 | $469.95 |
| SMC-L | Loss or loss of use combinations; aid and attendance | $4,900.83 | $962.25 |
| SMC-R.1 | Maximum rate plus regular aid and attendance | $9,826.88 | $5,888.30 |
SMC-S alone is $5,639.40 a year, tax-free, riding on a single classification decision. A single SMC-K award is $1,678.44 a year. These are not rounding errors.
A worked example
Take a retiree with 26 years of active service and a high-three base of $7,400. Longevity retired pay is 26 × 2.5 percent = 65 percent, or $4,810 a month. The VA rates him 100 percent, every condition is approved as combat-related, and the VA also pays SMC-S.
- If the branch classifies the SMC-S as CR-SMC: gross CRSC under ¶¶ 8.1 and 8.1.2 is the full VA figure including SMC, $4,408.53. His waived retired pay is $4,408.53 as well, since his $4,810 retired pay exceeds the VA amount. The ¶ 8.2 lesser-of rule gives him $4,408.53.
- If it is classified Non-CR-SMC: the SMC drops out of the gross figure, which falls back to the 100 percent rate of $3,938.58. The cap is still $4,408.53. Lesser-of gives him $3,938.58.
Same retiree, same VA award, same combat-related conditions. $469.95 a month — $5,639.40 a year — turning on one classification.
Now change one number. Give him 22 years instead of 26, so his longevity retired pay is 55 percent of $7,400, or $4,070. His waived pay is capped there. Gross CRSC of $4,408.53 exceeds it, so he receives $4,070 either way, and ¶ 7.3 lets the branch decline to classify the SMC at all. Nothing is wrong with his award. Nothing has been denied. There is simply an unanswered question sitting in his file. You can run your own numbers with the CRSC calculator, and our explainer on how CRSC is actually calculated shows which side is holding your check where it is.
The combination problem
Paragraph 7.2 tells the department to classify each SMC award consistent with the determination on “the diagnostic codes on which the SMC is based.” That instruction is clean when an award rests on one code. SMC-K for loss of use of a foot traceable to a single blast injury already found combat-related is an easy call.
It is not clean for the levels built from combinations, which is most of them. SMC-S needs a single 100 percent disability plus a separate 60 percent, or the housebound finding. SMC-L through SMC-O are defined almost entirely by pairings — loss of use of one hand and one foot, blindness plus deafness, and so on. If one element of the combination is combat-related and another is not, Chapter 63 does not say which way the award is classified. We have not found a published rule that resolves it, and we are not going to invent one here.
What we do say is this: that ambiguity is a reason to do the work yourself rather than hope. For each SMC award you hold, identify in writing which VASRD diagnostic code supplies which element, and mark which of those codes your branch has already found combat-related. If your SMC-S rests on the housebound basis rather than the 100-plus-60 basis, say so explicitly — that route does not depend on the second condition at all, which can simplify a case that otherwise looks mixed. A board reading a clearly mapped request has something to decide. A board reading a bare assertion has something to defer.
What this means for military retirees
Three practical consequences.
Silence on your letter is not a decision. If your CRSC determination says nothing about an SMC award you hold, the most likely explanation is ¶ 7.3, not a denial. Denials come with reasons; ¶ 7.3 comes with nothing. Check your Retiree Account Statement line by line as well, since that is where the CRSC figure actually lands each month.
It matters most to retirees who are not capped. Broadly, the gross amount binds when your waived retired pay is relatively high compared with the VA value of your combat-related conditions — longer service, higher base pay, or a combat-related percentage well below your overall VA rating. If the VA side is currently binding, SMC is live money for you. If the retired-pay side is binding, it is not, today.
Chapter 61 retirees should set expectations carefully. The ¶ 8.5 longevity reduction is a hard ceiling, and many medical retirees sit against it. Being told plainly that a determination would not change your check this year is more useful than being sold a request that cannot pay off. Our guide to CRSC for Chapter 61 medical retirees covers that ceiling in detail. The classification is still worth having on record for later.
One more caution. Individual unemployability is a related but separate question, governed by ¶ 8.1.3, which directs DFAS to use the DVA compensation “actually provided to the member, irrespective of the DVA schedule rating percentage.” People routinely conflate that with SMC. They are different paragraphs doing different work, and we treat unemployability on its own in our post on CRSC with a 100 percent or TDIU rating.
What you should do now
- Find out whether you hold SMC at all. It appears on your VA rating decision and award letter as a letter designation — K, L, S, and so on. Many veterans receive it without registering what it is.
- Pull your CRSC determination letter and look for any reference to SMC. If there is none, note that and move on. It is the expected result, not evidence of a problem.
- Work out whether you are capped. Compare the VA-rate value of your approved combat-related conditions against the retired pay you waived. If they are equal, the retired-pay side is binding and SMC will not move your payment today.
- Map the codes. One line per SMC award: the level, the diagnostic codes it rests on, and whether each has already been found combat-related.
- Make the request in writing to your branch board — Army, Navy, Marine Corps, Air Force, Space Force or Coast Guard. Paragraph 10.3.1 lets you submit additional, clarifying or new documentary information, and the reconsideration route is the right vehicle.
- Ask for it to be recorded even if it changes nothing now. Acknowledge ¶ 7.3 in the request. A classification on file is what protects you when the cap later moves.
What to attach
- The VA rating decision or award letter granting the SMC, with the paragraph naming the level and its basis
- A code list: every VASRD diagnostic code the SMC award rests on
- Your existing CRSC determination letter, showing which codes were already approved as combat-related
- Your most recent Retiree Account Statement, showing the current CRSC figure and the VA waiver
- Where the SMC rests on a code not yet found combat-related, the evidence for that code — the same standard as any other CRSC condition
- A one-page cover memo stating exactly what you are asking for, citing ¶¶ 7.2 and 8.1.2
If a prior submission came back short on the underlying conditions rather than on the SMC, that is a different problem with a different fix; our guide to denials for insufficient evidence walks it. And if the underlying code is a Purple Heart injury, the Purple Heart path has its own documentation rules.
Frequently asked questions
Does CRSC include special monthly compensation?
It can, conditionally. Paragraph 8.1.2 says SMC is part of gross CRSC “only if the SMC is paid on the basis of disabilities determined by the Military Department to be combat-related.” Your branch classifies each award as CR-SMC or Non-CR-SMC under ¶ 7.2 and notifies DFAS, which includes any CR-SMC in the computation. Even then it raises your payment only if the ¶ 8.2 cap has room.
Why doesn't my CRSC award letter mention my SMC?
Most often because the determination was never made. Paragraph 7.3 says the department “need not” make it for anyone who would not receive added compensation either way, and that the SMC is passed to DFAS as “undetermined combat-relatedness.” If you were already capped by waived retired pay or by the ¶ 8.5 Chapter 61 reduction, the question could not have changed your check. That is not a denial — it is an open item that becomes live when your cap moves.
Does SMC-K increase my CRSC payment?
Only if your branch classifies the award as combat-related and your gross CRSC sits below the retired pay you waived. SMC-K is paid under 38 U.S.C. § 1114(k) for each anatomical loss or loss of use on a defined list, and a veteran may hold up to three awards. At 2026 rates each is $139.87 a month. If you are already capped, the classification changes nothing today.
My SMC-S is based on one combat-related condition and one that isn't. What happens?
Chapter 63 does not spell out an answer for mixed-basis awards. Paragraph 7.2 says to classify consistent with the determination on the codes the SMC rests on, and SMC-S under 38 CFR 3.350(i) rests on a 100 percent disability plus a separate 60 percent, or on being permanently housebound. Do not leave it to inference: identify which code supplies each element, and if the housebound basis applies, say so, because it does not depend on the second condition.
How do I ask my branch for an SMC combat-related determination?
In writing to your branch CRSC board, as a reconsideration under ¶ 10.3.1, which permits additional, clarifying or new documentary information at any time. Name the SMC level, attach the VA decision granting it, list the diagnostic codes it rests on, show which are already approved as combat-related, and request a determination under ¶ 7.2. If you are capped, acknowledge ¶ 7.3 and ask for the classification to be recorded anyway. Keep a copy of the request and the response.
The bottom line
Special monthly compensation is one of the few places in the CRSC computation where a meaningful amount of money turns on a single administrative step — one the regulation expressly allows your branch to skip. That combination, real dollars plus a permitted silence, is why it goes unclaimed.
Work out whether you are capped first. If you are, a request will not pay off this year, and we would rather tell you that than take your time. If you are not, the classification under ¶ 7.2 is worth pursuing in writing, with the codes mapped and the rating decision attached. And either way, if you hold SMC and your CRSC letter is silent about it, get the determination on the record while the documents are in front of you.
Sources: Department of Defense, DoD 7000.14-R, Financial Management Regulation, Volume 7B, Chapter 63, “Combat-Related Special Compensation (CRSC)” (June 2024), paragraphs 5.2 and its NOTE (per-code determinations), 7.1 (SMC generally), 7.2 (special determination; CR-SMC and Non-CR-SMC classification; notification to DFAS-Cleveland), 7.3 (grades not requiring SMC determinations; “undetermined combat-relatedness”), 8.1 and 8.1.1 (gross monthly amount; dependent rates), 8.1.2 (SMC inclusion), 8.1.3 (members considered unemployable), 8.2 (adjusted amount; the lesser-of rule), 8.5 (Chapter 61 payment reduction) and 10.3.1 (denial and reconsideration), published by the Office of the Under Secretary of Defense (Comptroller); 10 U.S.C. § 1413a; 38 U.S.C. § 1114, subsections (k) through (t); 38 U.S.C. § 1115; 38 CFR 3.350, including 3.350(a) (ratings under § 1114(k)) and 3.350(i) (total plus 60 percent, or housebound); Department of Veterans Affairs, Current special monthly compensation rates and Current Veterans disability compensation rates, both effective December 1, 2025, va.gov; Defense Finance and Accounting Service, Combat Related Special Compensation, dfas.mil. Rates quoted are the 2026 figures effective December 1, 2025, for a veteran with no dependents; regulatory text is from the June 2024 edition of Chapter 63 and the current edition of Title 38 of the Code of Federal Regulations. Your branch’s determination letter, your VA rating decision, and your Retiree Account Statement control your own case.
This article is provided for general educational purposes and is not legal advice, financial advice, or a guarantee of CRSC eligibility, approval, effective date, or payment amount. Rules, guidance, and implementation procedures can change. Veterans should verify current requirements with their military department, DFAS, the Department of Veterans Affairs, or an appropriately accredited representative.