Military Pay: Basic Pay, Allowances & More

Overview

Your military pay is made up of multiple components — including basic pay, allowances, special and incentive pays and retirement benefits. Let’s take a closer look at what makes up your core pay, along with a plan to get the most out of the benefits you’re earning.

Basic pay

Basic pay is your primary form of compensation and is calculated based on your rank and years of service. You earn it monthly, but it hits your account twice a month. It’s usually taxed, though there are some exceptions depending on where you’re serving.

Note: Annual military basic pay increases are based on the U.S. Bureau of Labor’s Employment Cost Index, which tracks and calculates the cost of labor. Any additional compensation increases are approved by Congress.

Visit Military Compensation and Financial Readiness to learn more about basic pay.

Military allowances

Military allowances are payments that offset housing, food and living expenses. Most allowances are nontaxable, which means you can utilize the full value of your allowance.

Basic Allowance for Housing

Basic Allowance for Housing is money the military gives you to help pay for housing. The amount you receive is based on:

The cost of rent in the area where you’re assigned
Your pay grade
Whether you have dependents

What to expect:

BAH is meant to help with housing costs, but it won’t always cover everything.
You get to choose where you live off base, so your actual costs might be higher or lower than your BAH, depending on the place you pick.
Because BAH is tied to local rental prices, the rates usually change each year as housing costs go up or down.

If you’re stationed overseas:

You may receive Overseas Housing Allowance instead of BAH if government housing isn’t available.

There are different types of BAH to fit different situations. In most cases, you receive BAH based on the location of your duty station — not where you live.

You may also get certain BAH amounts if you and your dependents live in different places, such as during an unaccompanied overseas tour or when a child lives with a former spouse.

Use the Defense Travel Management Office’s BAH Rate Lookup to determine your BAH rate.

Basic Allowance for Subsistence

BAS is a monthly allowance to help offset the cost of food. It is:

Intended to cover costs for service members only, not dependents.
Adjusted based upon the percentage increase of the price of food as identified by the USDA. View the current BAS rate.

Basic Needs Allowance

BNA is a monthly allowance given to qualified military families whose income falls below certain Federal guidelines. BNA is designed to assist with housing expenses, utilities, food and child care.

Service members must meet four initial requirements to be considered for BNA. Each military branch proactively screens service members against those four criteria and notifies them in writing if they are eligible to apply, and provides service-specific instructions on how to apply.

Eligibility requirements include:

Must be an active-duty service member (including National Guard/reserve on active-duty orders)
Must have at least one dependent registered in DEERS
Must have a gross household income from the preceding calendar year that falls below a specified percentage of the Federal Poverty Guidelines for the duty station location and household size
Must have completed initial entry training

Have questions about eligibility? Check out the BNA FAQs from DFAS or Financial Readiness: Basic Needs Allowance for more details.

Note: You can contact your installation’s Military and Family Support Center for general guidance.

Other allowances

Clothing Allowance is a nontaxable allowance that pays for uniform purchase and maintenance.
Cost of Living Allowance for CONUS is a taxable allowance created to offset higher prices in certain CONUS locations.
Overseas Cost of Living Allowance is a nontaxable allowance designed to offset higher overseas prices of nonhousing goods and services.
Dislocation Allowance is a nontaxable allowance that allows for partial reimbursement of expenses due to PCS orders or other required moves.
Family Separation Allowance is a nontaxable allowance to offset costs to eligible service members who are separated from their dependents due to military service.
Family Subsistence Supplemental Allowance is a nontaxable allowance to assist with costs experienced by eligible service members with dependents when serving overseas. Service members can apply for the FSSA using DD Form 2857.

For more information on allowances, visit Military Compensation and Financial Readiness and DTMO’s Allowances.

Special and incentive pays

While basic pay and allowances cover the foundation of military pay, special and incentive pays are used to compensate service members for qualifying conditions and to recruit and retain them. Common S&I pays are:

Hardship Duty Pay is an allowance paid to service members, both officer and enlisted, based on mission specifics, operations tempo or duty location in areas with living conditions substantially below the CONUS.
Assignment Incentive Pay is offered to encourage service members to volunteer for difficult-to-fill or less desirable assignments, locations or units designated by and under conditions of service specified by the military.
Hazardous Duty Incentive Pay is given to service members who perform a duty that is inherently dangerous or risks physical injury.
Special Duty Assignment Pay recognizes service in assigned duties determined to be extremely demanding, requiring a greater than normal degree of responsibility or difficulty, or requiring special qualifications.
Per Diem is an allowance designed to address and offset lodging, meal and incidental costs incurred while on official government travel. Per diem rates vary depending on geographic location. Visit DTMO’s Per Diem Rates Lookup to view current CONUS and OCONUS per diem rates.
Hostile Fire/Imminent Danger Pay is provided to service members who meet specific criteria while serving in areas exposed to hostile fire or imminent danger.

Managing your money

Understanding how your pay works — and where your money goes — is a key part of managing your finances. Here are a few steps you can take now to strengthen your money habits and set yourself up well for the future.

Understand your Leave and Earnings Statements.

Your LES contains detailed information about all elements of your pay and compensation, including leave and retirement. Review it monthly, and when you have career or personal changes, such as a promotion or marriage, to confirm all information is correct.

Entitlements show how much you were paid through your basic pay and various supplements.
Deductions list what has been taken out of your pay — including taxes and retirement contributions.
Allotments are designated amounts of money automatically distributed for you, from your pay. Be sure you know what they are for, who is receiving them and when they will be paid in full.
Summary shows how much money was deposited in your account after deductions and allotments were distributed.
Leave reflects the amount of chargeable leave you have available. Active-duty service members earn 2.5 days of leave each month, totaling 30 days per year. Learn how military leave works.
Command Agency Contribution shows what your service branch or command is contributing on your behalf toward a specific benefit, most commonly your Thrift Savings Plan or flexible spending account.

For additional information and to access your LES statement, visit DFAS myPay.

Open a military-friendly bank account.

Consider financial institutions that specialize in serving the military community. They may offer benefits like early direct deposit, reduced fees and deployment support services.
Ensure the institution you choose accepts direct deposits from DFAS. Set up your account information accurately in MyPay to avoid issues with receiving your pay.
Check if your institution offers nationwide ATM access or provides reimbursement for out-of-network ATM use, and if it offers online and mobile banking.
Confirm your institution’s overdraft protection policy, including if any fees are involved, what their protections are and what your responsibilities are if identity theft or unauthorized use occurs.
Ask about military benefits — some institutions offer sign-up bonuses, low-interest loans or special savings programs for service members and their families.

Retirement savings

It’s never too early or too late to save for retirement. The Thrift Savings Plan allows you to save a percentage of your pay through payroll deductions. TSP is one component of the War Department’s Blended Retirement System and is like a 401K. Here are some tips to maximize your TSP account.

Contributing to your TSP account as soon as possible gives your savings more time to grow.

Under the BRS (for service members who joined on or after Jan. 1, 2018, or opted in), your service automatically contributes the equivalent of 1% of your basic pay to your TSP account starting 60 days after your pay entry base date. At the start of your 25th month of service from your PEBD, your service begins contributing up to an additional 4%, known as the Service Matching Contribution. To receive the full 4% match, you must be contributing at least 5% of your basic pay.

You decide when to pay income tax on the money you contribute to your TSP account. You can pay taxes either when you earn and contribute the money, known as a Roth account, or when you withdraw it, known as a Traditional account. For more information, visit TSP’s Traditional and Roth Contributions. You may also want to speak with a financial counselor or tax preparer of your choice to determine the right account options for your tax goals.

Try it: TSP calculator
Don’t know which plan to choose? Try this calculator to find the one that works best for you.

The Combat Zone Tax Exclusion lets you exclude all or part of your earnings from federal income tax while you’re deployed to a designated combat zone. This can increase your take-home pay and help you reach your financial goals faster. It also allows you to contribute more than the usual limit to your TSP.

Review your contribution rate, investment allocation and matching contributions on a regular basis. You can use online tools, calculators or TSP resources to project your outcomes and ensure you’re on track.

Visit the TSP website to learn more about plans, get tips for managing your money and more. You can also call the TSP ThriftLine at 877-968-3778, or download the TSP mobile app.

Financial support

Understanding your military pay and benefits is key to personal, financial and mission readiness. Remember, you are not alone as you work toward maximizing your military pay and benefits. Financial counselors are here to help you with:

Decoding your LES
Developing or updating your spending plan
Setting and making a plan to achieve financial goals
Building savings
Addressing debt
Understanding your tax options and responsibilities

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Understanding Your Military Pay

Overview

Basic pay