54,000 Combat-Wounded Veterans Are Losing Retirement Pay They Earned. The Major Richard Star Act Would End That. Here Is What Every East Valley Veteran Needs to Know.
TEAM CASSELS | EAST VALLEY MORTGAGE
If you were wounded in combat and medically retired before completing 20 years of service, current federal law reduces your military retirement pay dollar-for-dollar by the amount of VA disability compensation you receive. In some cases, the offset eliminates the retirement pay entirely. The Wounded Warrior Project calls it the "wounded warrior tax." Defense Secretary Pete Hegseth calls it unjust. More than 60 veteran and military organizations are demanding Congress fix it. The Major Richard Star Act is the bill that would.
HOW THE "WOUNDED WARRIOR TAX" WORKS TODAY
Military Retirement Pay Earned
$X
Reward for honorable service
VA Disability Compensation
$Y
Compensation for combat wounds
What They Actually Receive
$Y Only
Retirement wiped out dollar-for-dollar
Under current law, for every dollar of VA disability compensation a combat-medically-retired veteran receives, one dollar is deducted from their military retirement pay. The two benefits are supposed to serve completely different purposes. The retirement pay rewards decades of honorable service. The disability compensation addresses the lasting physical and mental cost of combat wounds. Forcing veterans to forfeit one to receive the other is not just unfair. It is the law.
The Man Behind the Name
U.S. ARMY RESERVE
Major Richard Star
Combat Engineer · Iraq & Afghanistan
Major Richard Star served as an Army Reserve combat engineer in both Iraq and Afghanistan. After his service, he was diagnosed with stage 4 lung cancer caused by his exposure to toxic burn pits during deployment. He became a tireless advocate for veterans facing the same retirement pay offset that cut his own income, testifying before Congress and demanding justice for medically retired service members. He died in 2021. Congress named the bill for him. It still has not passed.
Who the Current Law Affects and Who It Does Not
Understanding the offset requires understanding a distinction that most civilians, and many veterans themselves, are not fully aware of. Not all veterans who receive both retirement pay and VA disability face the offset. The injustice falls specifically on one group.
|
Protected Under Current Law Veterans with 20+ years of service and a 50%+ disability rating These veterans receive Concurrent Retirement and Disability Pay (CRDP), which allows full retirement pay AND full VA disability compensation without offset. They completed their full service commitment before being disabled. |
Penalized Under Current Law Veterans medically retired before 20 years due to combat wounds These veterans — roughly 54,000 of them — were FORCED out of service by the wounds they received in combat. They could not complete 20 years. Their retirement pay is offset dollar-for-dollar by their VA disability. Some receive no retirement pay at all. |
The fundamental injustice is this: a veteran who chose to leave the military after 20 years, having sustained no combat injuries, receives full concurrent benefits. A veteran who was forced out after 15 years because their legs were destroyed by an IED in Fallujah does not. Current law punishes the more seriously injured veteran for the severity of the sacrifice that ended their service early.
Where the Bill Stands and Why It Matters Now
The Major Richard Star Act has bipartisan sponsorship in both chambers, support from more than 60 veteran and military organizations, public backing from Defense Secretary Pete Hegseth, and formal resolutions of support from at least eight state legislatures including Iowa. It has passed committee hearings. It has been introduced in multiple sessions. It has not passed into law.
The primary obstacle is cost. The Senate Veterans Affairs Committee estimates the bill would cost approximately $11 billion over ten years to cover the roughly 54,000 veterans eligible under the Combat-Related Special Compensation program. Critics have cited larger estimates that encompass a broader population of medical retirees. That cost debate has repeatedly stalled a bill that has near-universal support in principle among both parties.
The advocates' response is direct: the cost of ending an unjust offset should not be weighed against the sacrifice of the veterans who created the need for it. These men and women did not choose to leave the military. They were carried out of combat. The nation's fiscal calculation should not be balanced on their retirement income.
Military retirement pay rewards service. VA disability addresses wounds. These are not the same benefit. Veterans should not be forced to choose between them.
— The core argument behind the Major Richard Star Act, supported by 60+ military and veteran organizations
What This Means for Your Home Purchase in the East Valley
For combat-injured veterans living in Mesa, Gilbert, Chandler, Queen Creek, San Tan Valley, Eastmark, or Apache Junction who are currently subject to the retirement pay offset, the financial impact of the Major Richard Star Act on homeownership would be direct and significant.
Mortgage qualification is built on income. When the offset reduces or eliminates your retirement pay, your qualifying income is lower than what your total earned compensation should be. If the Act passes and you begin receiving both benefits concurrently, that additional income changes your debt-to-income ratio, which directly affects how much home you can qualify for, which East Valley communities are within reach, and what your monthly payment looks like at a given price point.
If you are a combat-medically-retired veteran who is currently navigating a home purchase in the East Valley, or planning one in the next year, understanding your current income picture and how it would change if the Act passes is a conversation worth having now rather than after legislation moves. Team Cassels has served Veterans since 2002, understands VA programs in depth, and can model your purchasing power under your current and potential future income scenarios.
FOR REAL ESTATE AGENTS, FINANCIAL PLANNERS, AND ATTORNEYS
If you serve Veterans in the East Valley, this bill and what it would do to their income is a conversation you need to be ready to have.
Real estate professionals and financial advisors who serve Veterans across Mesa, Gilbert, Chandler, Queen Creek, San Tan Valley, Eastmark, and Apache Junction should understand the Major Richard Star Act and what passage would mean for their clients' income, purchasing power, and financial planning. Team Cassels is the mortgage partner who understands these programs, advocates for Veterans, and can help you serve your Veteran clients with the depth of knowledge they deserve. Call us.
FREQUENTLY ASKED QUESTIONS
5 Questions East Valley Veterans Are Asking About the Major Richard Star Act
I was medically retired after 12 years due to injuries I received in combat. Am I affected by the current offset?
Likely yes, if you are receiving both military retirement pay and VA disability compensation. Veterans who were medically retired before completing 20 years of service and who receive VA disability are classified as Chapter 61 retirees. Under current law, their retirement pay is offset dollar-for-dollar by their VA disability compensation. The specific amounts depend on your retirement pay grade and disability rating, but the structure is the same: one benefit is reduced by the amount of the other. A conversation with a benefits specialist or the Wounded Warrior Project's benefits service can clarify your exact situation.
What is Combat-Related Special Compensation and how is it different from what the Major Richard Star Act would provide?
Combat-Related Special Compensation (CRSC) is an existing program that provides some relief from the offset for veterans whose disabilities are specifically related to combat. It allows affected veterans to receive some additional monthly pay, but it is not the same as full concurrent receipt of both retirement pay and VA disability. The Major Richard Star Act would go further: it would allow eligible veterans to opt out of CRSC entirely and instead receive their full military retirement pay AND their full VA disability compensation without any offset. Veterans would have the choice of which structure works better for their situation.
If the Major Richard Star Act passes, how would it change my ability to qualify for a VA home loan in the East Valley?
If you are currently subject to the retirement pay offset, your qualifying income for a VA home loan is reduced accordingly. When a lender calculates your debt-to-income ratio for a home purchase in Gilbert, Mesa, or Chandler, they use your documented income. If the Act passes and you begin receiving both benefits concurrently, that additional income is documentable and changes your DTI calculation. More income at the same debt level means a higher qualifying loan amount, which means more East Valley communities and more home options are within reach. The exact impact depends on your specific income figures, which is a conversation Team Cassels is prepared to have with you in detail.
Why has Congress not passed this bill if it has so much bipartisan support?
Cost. The Senate Veterans Affairs Committee estimates the bill would cost approximately $11 billion over ten years for the roughly 54,000 veterans in the Combat-Related Special Compensation program. Some legislators have cited larger estimates reflecting a broader population of medical retirees. In a period of significant federal spending pressure, the cost argument has been enough to stall a bill that has near-universal moral support. Advocates argue that the cost should not be weighed against the sacrifice of veterans who were wounded in combat. That debate continues to play out in committee hearings and floor votes.
How can I advocate for the Major Richard Star Act and stay informed about its progress?
The Wounded Warrior Project (woundedwarriorproject.org), the American Legion, the Veterans of Foreign Wars, and the Disabled American Veterans all have active advocacy campaigns for the bill and provide resources for contacting your elected representatives. Your Arizona congressional delegation members, including the offices of Senator Mark Kelly and Senator Ruben Gallego in the Senate and your House representative, can be contacted directly. State-level resolutions supporting the Act, like those passed in Iowa and seven other states, demonstrate that civilian legislative bodies can add meaningful pressure on Congress to act.
FOR EAST VALLEY VETERANS
You Served. You Were Wounded. You Earned Both. Let Us Make Sure Your Home Purchase Reflects Every Dollar You Are Entitled To.
Whether the Major Richard Star Act has passed by the time you read this or is still working through Congress, Team Cassels knows VA programs, knows how to maximize your qualifying income, and is committed to serving Veterans the way Veterans deserve to be served. Since 2002.
TALK TO A VETERAN MORTGAGE SPECIALISTVisit teamcassels.com. No pressure. No obligation. Just expertise.