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Personal Finance – Benefits

As a service member, you’ve earned financial benefits like competitive pay and a compensation package to help protect your future. Take advantage of military benefits to shore up your personal finances – for both the short term and long term.

Do you have questions about saving for retirement?

Contact Military OneSource to speak with a financial counselor.

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Basic pay

Basic pay is the fundamental component of military pay. All members receive basic pay, and typically, it is the largest component of a service member’s pay. A member’s grade (usually the same as rank) and years of service determine the amount of basic pay received.


Allowances are the second-most-important element of military pay. Allowances are moneys provided for specific needs, such as food or housing. Monetary allowances are provided when the government does not provide for a specific need. For example, the quantity of government housing is not sufficient to house all military members and their families, so those who are not able to live in government housing receive allowances to assist them in obtaining commercial housing. Those who live in government housing do not receive full housing allowances.

The most common allowances are basic allowance for subsistence and basic allowance for housing. A majority of the force receives both of these allowances and, in many cases, BAS and BAH are a significant portion of the member’s total pay.

Most allowances are not taxable, which is an additional benefit of military pay.

Special and incentive pays

Special and incentive pays provide the services with flexible additional pays that can be used to address specific manning needs and other force management issues that cannot be efficiently addressed through basic pay increases.

Unlike basic pay and allowances, which vary by pay grade and years of service, S&I pays can be used to improve recruiting and retention by increasing compensation in key occupation specialties or critical skill areas. These pays are also used to compensate for onerous or hazardous duty assignments or conditions. In addition, S&I pays can be used to provide incentives for service members to develop certain skills that are important to national security objectives.

Savings Deposit Program

The Department of Defense Savings Deposit Program was established to provide service members serving in designated combat zones the opportunity to build their financial savings.

  • Service members deployed to a combat zone get guaranteed 10% interest on money put into a savings account, up to $10,000 for each deployment.
  • Soldiers keep earning 10% interest up to three months after their return.

Thrift Savings Plan

Saving is easier when you have a simple retirement strategy. The Thrift Saving Plan saves a percentage of your pay like the 401(k) plans offered by many private employers.

  • You can choose from two tax options: either make contributions to retirement on a pre-tax case and then pay taxes on the amounts at retirement, or contribute after-tax dollars, letting the amount grow over time and never paying taxes on that savings.
  • If you receive tax-free combat pay, you don’t have to pay any tax on TSP or Roth IRA contributions.
  • Your savings is yours to keep, whether you leave the military or stay in until retirement.

Post-9/11 GI Bill

The Post-9/11 GI Bill provides the full cost of in-state tuition and fees at public colleges covered for up to four academic years for eligible service members, or contributions toward an education at private colleges.

  • Benefits include a housing stipend and up to $1,000 a year for books and tutoring.
  • The bill covers the cost of education and training programs, including undergraduate and graduate studies, vocational schools and technical training.
  • Benefits may be transferable to a spouse or children after six years of service. Transferring benefits incurs a four year service obligation and you can’t transfer if you don’t have four years of service left

Affordable housing

  • Service members get a tax-free housing allowance when government quarters are not provided.
  • The size of the monthly benefits is based on your rank, location and family size. It is intended to cover part of your rent or mortgage payment so you can live off base comparably to civilians.

Low-cost life insurance

  • Service members have life insurance through Servicemembers’ Group Life Insurance.
  • The Veteran Administration’s low-cost life insurance programs were developed to provide financial security for your service members, veterans and their families.
  • You can provide your family with financial security at just 6 cents per $1,000 of insurance. For the full $400,000 in SGLI coverage, your premium will be just $24 per month, plus $1 per month for traumatic injury coverage.

Low-cost loans

  • The VA offers eligible service members low-cost home loans.
  • No down payment is required or private mortgage insurance.

Tax deductions

  • You or your spouse may be eligible for numerous tax deductions, some extended to all citizens in certain situations and others exclusive to service members and their families.

MilTax Free Tax Services

  • Military OneSource provides free tax preparation and filing services and tax consultations.
  • Free technical assistance is available, if you need it, at 855-897-8639
  • For personal tax-related questions, call 800-342-9647 to speak with a Military OneSource tax consultant. OCONUS/International? View calling options.

Service branch benefits

College saving options

  • Take advantage of Qualified Tuition Programs, or 529 plans. These are state-run plans designed to help you save for your child’s college tuition.
  • Qualified tuition programs come in two types: a prepaid tuition plan and a college savings program. Most states offer both.

Contacting Military OneSource can put you on the path to making the most of your financial benefits. Call 800-342-9647 anytime. OCONUS/International? View calling options.

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