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Military Pay 101: How Much Do You Earn?
At first glance the various military pay entitlements for members of the uniformed services can seem confusing. A variety of factors determines the actual pay amount a servicemember receives. These factors include such things as the servicemember’s rank, military specialty, length of time in service, assignment location, whether the servicemember has dependents, and whether and where the servicemember is deployed. Even though the nuances of how military pay is determined and the different categories of pay can seem overwhelming and difficult to understand, family members need to know about their sponsor’s pay and entitlements so they can make informed decisions in regards to household budgets.
Let’s start with an explanation about some of the terms you hear in discussions of military pay. An entitlement is a payment or benefit that is authorized by law. Military members are entitled by law to several types of pay, as well as certain benefits, most notably health care. When people refer to regular military compensation, they are generally talking about the mix of pay and allowances that is the military equivalent to civilian wages and salaries. Military pay consists of basic pay and several types of special pays. Allowances are payments provided for specific needs, such as food or housing, when not provided by the government.
Types of Pay
There are more than 40 types of military pay, but most servicemembers only receive a few different types throughout their careers. A servicemember’s Leave and Earnings Statement (LES) shows what pays and allowances a he or she is receiving. The types of pay and allowances received 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 servicemember’s compensation. It is structured according to the servicemember’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 servicemembers of certain ranks and years of service. In recent years, military pay raises have been greater than average civilian raises.
Basic Allowance for Subsistence (BAS)
BAS is a non-taxable allowance intended to offset the cost of the servicemember’s meals. The BAS rate is adjusted annually based on the cost of food. All officers receive the same allowance, $279.88 per month in 2007. Most enlisted personnel receive the regular BAS of $192.74. Enlisted personnel in basic training are required to eat in government dining facilities and therefore do not receive BAS.
Basic Allowance for Housing (BAH)
BAH is a non-taxable allowance to offset housing costs. The amount of BAH is determined by rank, duty assignment, and whether or not there are family members. Servicemembers 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. The current standard used to determine the BAH for an E-5, for example, is a two-bedroom townhouse.
Deployment-Related Pays and Allowances
When servicemembers deploy, they receive additional pays and allowances based on their deployment location, the length of deployment, and whether or not they have a family. Deployment pays and allowances include:- Family Separation Allowance (FSA) is paid during extended periods of family separation. The current amount of FSA is $250 per month.
- Imminent Danger Pay is for servicemembers serving within an officially declared hostile fire/imminent danger zone. The current rate is $225 per month.
- Hardship Duty Pay compensates servicemembers assigned to certain duty stations, which are deemed to be arduous. The amount is based on the location.
- Per diem, including payments for incidental expenses, is paid to servicemembers on some deployments.
Other Pays and Allowances
Your finance office can provide additional information about the many other special pays and allowances available in special circumstances or to servicemembers 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 is based on the assignment location.
- Cost of Living Allowance (COLA) is paid to help with higher cost of living in certain areas within the United States and overseas.
- Assignment Incentive Pay may be offered to entice servicemembers 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 servicemembers 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 bonus for medical personnel, are among the pays designed to compensate servicemembers in certain missions with certain 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.
What’s Taxable?
Understanding the tax implications of the various military pays and allowances can be complicated. Some types of military compensation are taxable and others are not. A helpful rule of thumb is that if the entitlement contains the word “Pay” in the title, i.e. basic pay, it is considered taxable income, unless the servicemember is serving in a designated tax-free combat zone. If the servicemember is in a combat zone, all income earned by enlisted members is tax free, including assignment and reenlistment 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, it is usually non-taxable, i.e. Basic Allowance for Housing.
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