To amend title 10, United States Code, to eliminate the offset between military retired pay and veterans service-connected disability compensation for certain retired members of the Armed Forces who have a service-connected disability, and for other purposes.

Summary: Disabled Veterans Tax Termination Act - Amends federal military retired pay provisions to: (1) permit veterans with a service-connected disability of less than 50% to claim both retired pay and disability compensation; (2) eliminate provisions requiring a phase in between January 1, 2004, and December 31, 2013, of concurrent receipt of retired pay and disability compensation; (3) eliminate the four-year phase in of concurrent receipt of retired pay and disability compensation for disabled veterans determined to be individually unemployable; (4) permit certain veterans with combat-related disabilities (Chapter 61 retirees) to claim both retired pay and disability compensation; and (5) extend combat-related special compensation to certain veterans with less than 20 years of service who have a combat-related disability (TERA retirees).

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Disabled Veterans Tax Termination 
Act''.

SEC. 2. ELIGIBILITY FOR PAYMENT OF BOTH RETIRED PAY AND VETERANS' 
              DISABILITY COMPENSATION FOR CERTAIN ADDITIONAL MILITARY 
              RETIREES WITH COMPENSABLE SERVICE-CONNECTED DISABILITIES.

    (a) Extension of Concurrent Receipt Authority to Retirees With 
Service-Connected Disabilities Rated Less Than 50 Percent.--Section 
1414 of title 10, United States Code, is amended by striking paragraph 
(2) of subsection (a).
    (b) Repeal of Phase-in of Concurrent Receipt of Retired Pay and 
Veterans' Disability Compensation.--Such section is further amended--
            (1) in subsection (a), by striking the final sentence of 
        paragraph (1);
            (2) by striking subsection (c) and redesignating 
        subsections (d) and (e) as subsections (c) and (d), 
        respectively; and
            (3) in subsection (d) (as so redesignated), by striking 
        subparagraph (4).
    (c) Clerical Amendments.--
            (1) The heading for section 1414 of such title is amended 
        to read as follows:
``Sec. 1414. Members eligible for retired pay who are also eligible for 
              veterans' disability compensation: concurrent payment of 
              retired pay and disability compensation''.
            (2) The item relating to such section in the table of 
        sections at the beginning of chapter 71 of such title is 
        amended to read as follows:

``1414. Members eligible for retired pay who are also eligible for 
                            veterans' disability compensation: 
                            concurrent payment of retired pay and 
                            disability compensation.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the first day of the first month beginning after the date of 
the enactment of this Act and shall apply to payments for months 
beginning on or after that date.

SEC. 3. COORDINATION OF SERVICE ELIGIBILITY FOR COMBAT-RELATED SPECIAL 
              COMPENSATION AND CONCURRENT RECEIPT.

    (a) Eligibility for TERA Retirees.--Subsection (c) of section 1413a 
of title 10, United States Code, is amended by striking ``entitled to 
retired pay who--'' and all that follows and inserting ``who--
            ``(1) is entitled to retired pay, other than a member 
        retired under chapter 61 of this title with less than 20 years 
        of service creditable under section 1405 of this title and less 
        than 20 years of service computed under section 12732 of this 
        title; and
            ``(2) has a combat-related disability.''.
    (b) Amendments to Standardize Similar Provisions.--
            (1) Clerical amendment.--The heading for paragraph (3) of 
        section 1413a(b) of such title is amended by striking ``rules'' 
        and inserting ``rule''.
            (2) Specification of qualified retirees for concurrent 
        receipt purposes.--Subsection (a) of section 1414 of such 
        title, as amended by section 2(a), is amended--
                    (A) by striking ``a member or'' and all that 
                follows through ``retiree')'' and inserting ``an 
                individual who is a qualified retiree for any month'';
                    (B) by inserting ``retired pay and veterans' 
                disability compensation'' after ``both''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(2) Qualified retirees.--For purposes of this section, a 
        qualified retiree, with respect to any month, is a member or 
        former member of the uniformed services who--
                    ``(A) is entitled to retired pay, other than in the 
                case of a member retired under chapter 61 of this title 
                with less than 20 years of service creditable under 
                section 1405 of this title and less than 20 years of 
                service computed under section 12732 of this title; and
                    ``(B) is also entitled for that month to veterans' 
                disability compensation.''.
            (3) Standardization with crsc rule for chapter 61 
        retirees.--Subsection (b) of section 1414 of such title is 
        amended--
                    (A) by striking ``Special Rules'' in the subsection 
                heading and all that follows through ``is subject to'' 
                in paragraph (1) and inserting ``Special Rule for 
                Chapter 61 Disability Retirees.--In the case of a 
                qualified retiree who is retired under chapter 61 of 
                this title, the retired pay of the member is subject 
                to''; and
                    (B) by striking paragraph (2).
    (c) Effective Date.--The amendments made by this section shall take 
effect on the first day of the first month beginning after the date of 
the enactment of this Act and shall apply to payments for months 
beginning on or after that date.