Understanding Military PayUpdated: December 23, 2022
Military pay can be hard to understand-at first. There are several types of compensation that may affect a military member’s total pay; some of them are considered “special pay” for duty or qualifications that warrant additional pay in the eyes of the Department of Defense, while other pay may be added for all servicemembers on a yearly basis, or as the result of re-enlisting. There are also allowances, incentive pay, and more.
Find the current 2023 military pay rates here.
How Military Basic Pay Works
Basic pay is the standard, taxable baseline amount a service member earns every month. Basic pay varies depending on three factors: the amount of time spent in the service to date, the time spent in the member’s current rank, and whether or not the military member is an officer or enlisted person. The lowest ranking enlisted member who has served the shortest amount of time in uniform will earn (at the time of this writing) just under $1,500 per month. The highest ranking and longest serving enlisted member will earn just under $8,000 per month.
It’s important to note that Active Duty pay differs from Guard/Reserve pay, and that serving full time offers different terms for pay, allowances, and entitlements than for those in the Guard and Reserve.
For Basic Pay, there is an annual cost-of-living increase that is determined by a variety of factors including Congressional approval.
How Military Allowances Work
According to the Department of Veterans Affairs official site (VA.gov), military allowances are the second most important type of pay available to the service member. Part of the reasoning for this is that allowances are not taxed, and some allowances are quite substantial.
According to the VA, “Allowances are monies provided for specific needs, such as food or housing. Monetary allowances are provided when the government does not provide for that specific need. For example, the quantity of government housing is not sufficient to house all military members and their families. Those who live in government housing do not receive full housing allowances. Those who do not live in government housing receive allowances to assist them in obtaining commercial housing.”
Military allowances include money for housing, uniforms, and meals, depending on rank. The housing allowance is determined in part based on zip code and the rental averages calculated for that area. Uniform allowances are paid annually in most cases. The first clothing allowance is paid to the member during basic training, and other clothing allowances apply beyond that.
When a military member gets orders to a new duty station, a moving truck is usually involved and all the expenses that go with that type of relocation. To help offset the costs of moving, whether overseas or stateside, the Department of Defense provides a dislocation allowance that is approximately $740 for the lowest ranking military member (without dependents). The amount of this allowance is based on the service member’s rank and “with dependents” or “without dependents” status.
Another type of military allowance is the Cost Of Living Allowance, or COLA. In the past, COLA applied mainly to overseas military assignments, but in 1995 new rules allowed those serving at stateside bases to begin receiving COLA based on location. COLA is also calculated based on rank and “with dependents” or “without dependents”.
Incentive, Bonus & Special Pay
There are other types of military pay that are important to get familiar with including special duty pay, incentive pay, sea pay, drill pay, family separation allowance, family subsistence and hazardous duty pay.
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News