The myriad military pay entitlements for members of the uniformed services can seem confusing, even overwhelming. Several factors determine the actual pay amount a service member receives – the service member’s rank, military specialty, length of service, assignment location, dependents, deployment status and location, and more. Despite the difficulties, military families must understand the categories and amounts of pay and entitlements to make informed decisions about household financial planning.
Military Pay Definitions
Let’s start with an explanation about some of the terms that arise in discussions about military pay.
- Entitlement: Apayment or benefit that is authorized by law. Military members are entitled by law to several types of pay, as well as certain benefits, notably health care. Regular military compensation generally refers to the mix of pay and allowances that is the military equivalent of civilian wages and salaries. Military pay consists of basic pay and several types of special payments.
- Allowances: Payments provided for specific needs, such as food or housing, when not provided by the government.
There are more than 40 types of military pay, but most service members receive only a few different types throughout their careers. A service member’sLeave and Earnings Statement (LES), issued monthly,shows the pay and allowances (s)he is receiving. The types of pay and allowances earned most often are Basic Pay, Basic Allowance for Subsistence (BAS), and Basic Allowance for Housing (BAH).
Basic Pay
Basic pay makes up the largest portion of a service member’s compensation. It is structured according to the service member’s rank and years of service. Military pay raises normally take effect in January of each year and are set by Congress based on wage increases in the civilian sector. In some years, additional targeted raises are provided for service members of certain ranks and years of service.
- Early this century, riding a wave of patriotism in the wake of the 9/11 attacks, military raises outpaced civilian raises.
- Since January 2010, however, military pay hikes have lagged, fractionally, behind private sector raises, sinking below 2% annually.
- The last few years, however, saw raises on the incline once more: 2.4% (2018), 2.6% (2019), 3.1% (2020), 3% (2021), 2.7% (2022) and 4.6% (2023). A 5.2% raise has been approved for 2024.
- An E-5 member with at least eight years of service saw his/her basic pay increase more than $352 per month during the Biden administration with another 5.2% coming in 2024.
Basic Allowance for Subsistence (BAS)
Basic Allowance for Subsistence (BAS) is a nontaxable allowance intended to offset the cost of the service member’s meals. The BAS rate is adjusted annually based on the cost of food. All officers receive the same allowance, $311.68 per month in 2021. Most enlisted personnel receive the regular BAS of $452.56. Enlisted personnel in basic training are required to eat in government dining facilities and thus do not receive BAS.
Basic Allowance for Housing (BAH)
BAH is a nontaxable allowance to offset housing costs. The amount of BAH is determined by rank, duty assignment, and the presence (or lack) of dependents. Service members who live in government-owned housing — either in barracks, dorms, or family housing — forfeit their housing allowance. BAH is determined through a survey of housing costs in each community for the housing size designated as the standard for each rank. BAH rates are published on the Defense Travel Management Office web page.
Special and Incentive Pay
When service members deploy, they receive additional pays and allowances based on their deployment location, length of deployment, and whether they have a family. Special and Incentive pays include:
- Family Separation Allowance (FSA) is paid during extended periods of family separation. FSA is $250 per month.
- Hostile Fire/Imminent Danger Payis for service members serving within an officially declared hostile fire/imminent danger zone. The current rate is $225 per month.
- Hardship Duty Pay comes in three designations.
- HDP-Locationcompensates service members assigned to locations outside the continental United States where living conditions are substantially below the standard members serving stateside would endure. Rates are paid in increments of $50, $100, or $150 per month, based on the level of hardship in a
- HDP-Missioncompensates officers and enlisted personnel for performing designated hardship missions.
- HDP-Tempoinvolves personnel who are mobilized or deployed for a specified mission. Secretaries of the military departments are authorized to designate such missions, but none have been implemented.
- Assignment Incentive Pay is a popular program that rewards service members on extended tours or unusual assignments. Personnel can receive from $200 to $3,000 extra per month, depending on the circ*mstances.
- Per diem, including payments for incidental expenses, is paid to service members on some deployments. Per diem, designed to cover lodging, meals, and certain incidentals, ranges from $151 per day (inside the continental U.S.) to more than $800 daily (outside the U.S.).
Other Pays and Allowances
The local finance office can provide additional information about the many other special pays and allowances available in special circ*mstances or to service members performing certain duties. Examples of special pays and allowances include but are not limited to:
- Overseas Housing Allowance (OHA) helps pay the cost of off-base housing in foreign countries. OHA, which takes into consideration the amounts personnel spend on rent, utilities, and move-in costs, is based on the assignment location.
- Cost of Living Allowance (COLA) defrays the higher cost of living in certain areas within the United States and overseas.
- Assignment Incentive Pay may be offered to entice service members to accept or extend an assignment in hard-to-fill billets in certain locations.
- Hazardous Duty Incentive Pay is for certain assignments including demolitions work, flight duty, exposure to certain toxic items, and parachuting. The amount is based on pay grade.
- A Clothing Allowance is provided to all service members upon entering the military. Enlisted personnel also receive an annual replacement clothing maintenance allowance that varies by service and gender.
- Flight Pay, Diving Pay, Sea Pay, and Submarine Duty Pay, as well as professional bonuses for medical personnel, are among the pays designed to compensate service members in certain missions with coveted skills and to retain them in the military.
- Drill Pay for National Guard and Reserve members is based on years of service, military specialty, and pay grade.
- Enlistment and re-enlistment bonuses are provided to meet the recruiting and retention needs of the services. They can be paid annually, on a one-time basis, or as a set amount spread over several years.
The tax implications of the various military pays and allowances can prove complicated. Some types of military compensation are taxable, and others are not.
A useful rule of thumb: If the entitlement contains the word“pay” in the title —i.e., Basic Pay — it is considered taxable income unless the service member is serving in a designated tax-free combat zone. In a combat zone, all income earned by enlisted service members is tax free, including assignment and re-enlistment bonuses.
Officers may exclude from income tax only the amount equal to the highest monthly rate of enlisted pay plus their $225 Imminent Danger Pay. If the entitlement contains the word“allowance” in the title —i.e., Basic Allowance for Housing — it usually is nontaxable.
The following example illustrates monthly pay and how that pay is taxed for a third-yearE-4 with a family, when deployed to Iraq from his/her duty station at Joint Base Lewis-McChord, Wash.:
In garrison: $2,507.10 basic pay + $386.50 BAS + $1,908 BAH = $4,801.60 total (only BAS and BAH are tax-free).
Deployed to Afghanistan: $2,507.10 basic pay + $386.50 BAS + $1,908 BAH + $250 Family Separation Allowance + $225 Imminent Danger Pay + $150 Hardship Duty Pay + $100 temporary duty per diem for incidental expenses = $5,526.60 (all tax-free).
Electronic Access To Pay Information
MyPay, a web-based service ofDFAS, provides up-to-date, round-the-clock pay information for military service members, DoD civilian employees, military retirees, and annuitants. Accessed through a personal identification number, the MyPay site also may be used to make address changes, review W-2 forms, or adjust contributions to the military Thrift Savings Program.
Because the service member’s Leave and Earnings Statement can be viewed through this secure site, many military families find MyPay especially useful during deployments. Service members often provide their PIN information to the spouse who then can access the LES through MyPay. Spouses find they are better able to help manage the family’s finances while the service member is away.
Military Pay Resources
To view the current tables for Basic Pay and other pays and allowances, visit theDefense Finance and Accounting Service (DFAS)and click on Military Pay Information.
For more information on tax issues affecting the military, contact your local military Legal Assistance Officer or view the Armed Forces resource page on theInternal Revenue Service website.
Individuals with questions about their military pay first should check with their local military finance office. They also can contactDefense Finance and Accounting Service. Obtain toll-free numbers and other contact information for each military service atwww.dfas.mil. Contact the Coast Guard’sFinance Center.
More About Military Pay
When you sign up for the military, you can expect a lot of challenges in front of you, many of them unexpected. That is especially true regarding your finances.Here are three articles that should help you deal effectively with bumps in the financial road:
- Financial Prep for Deployment
- Ten Strategies for a Financially Responsible Military Life
- Should Military Families Rent or Buy a Home?
