Military pay is made up of a basic amount, as well as allowances and special pays. The basic pay is based upon the rank and length of service of the member. Military members also receive other benefits, such as dental care, medical care, education assistance, and discount shopping, among others.
Active duty members earn a full-time amount. Reserve members who are not on active duty, earn a part-time amount, based on the number of drills they are required to perform on a monthly basis. Annual pay increases are normally linked to the increase in wages in the private sector, according to the Employment Cost Index measurement. Unless your pay is earned in a designated combat zone, the amount will be subject to income tax. Earnings that you receive whilst employed in a combat zone are not taxable. This amount will be unlimited for warrant officers and enlisted members. The amount is limited to a specific monthly level for officers. If you spend only one day in a combat zone, your entire month’s pay will be exempted from tax.
All the allowances that are available could make up a fair amount of your military pay. There are a wide range of allowances which are mostly non-taxable. There are distinct eligibility requirements linked to the various allowances.
All military members are entitled to either free or subsidized housing. The type of housing that you are eligible for is dependent upon your marital and dependency status, and your rank. Married members who live with their spouse and their minor dependents will be provided with housing on the base. Alternatively, if you choose to live off-base, you will be entitled to a basic allowance for housing. The basic allowance for housing amount is based on your rank and location, and if you have dependents or not. For those who are Reserves or are in the Guard, you will be entitled to a special reduced base allowance whenever you are on active duty for a period less than 30 days. You will receive the full housing allowance if you are called upon to serve for more than 30 days. If you are in barracks for basic training or to attend technical school, you will receive the full housing allowance. The military insists that you provide adequate housing for any dependents. Housing allowances are not taxable.
The Basic Allowance for Subsistence is offered to offset the costs of a member’s meals. The allowance is not meant to cover the cost of meals for family members. As of the beginning of 2002, all members receive a full subsistence allowance. However, they are responsible for paying for their meals, including the meals provided by the state. Subsistence allowances are adjusted on an annual basis, based on the increase of food prices. This increase is linked to the USDA food cost index. Different basic subsistence allowances apply for officers as compared to enlisted members.
Members are entitled to a dislocation allowance when they relocate their households due to a permanent change of station. This allowance is used to partially reimburse relocation costs and will most likely not reimburse all your relocation expenses. The amount that is allowed is based on a calendar year, and members are entitled to one dislocation allowance payment per fiscal year.
The family separation allowance is available to those members with dependents only. This type of allowance is payable when a member is forced to be separated, due to military orders, from his or her dependents for a period exceeding 30 days. Two types of separation allowances exist. Type 1 is payable to a member who has been forced to live off-base at a new location, due to enforced separation from his or her dependents. Any members who are on permanent duty outside the United States or in Alaska are eligible for the family separation allowance type I. There are specific conditions that apply to this allowance. The government will not be liable for transportation expenses for the dependents to the station or a place close to the station. The allowance is payable if the dependents do not live close to or at the permanent duty station. If there are inadequate government housing facilities for the member and the member has to live off-base, the allowance will be applicable.
Family separation allowance type II pays for the added expenses incurred if the member is on duty aboard a ship which is away from the home port for a continual period exceeding 30 days. It applies when the member has been allocated temporary additional duty away from his or her permanent duty station for a continual period exceeding 30 days, and their dependents are not living near or at the temporary station.
Enlisted members are given an allowance to pay for maintenance and replacement of their uniforms. The allowances are based on estimated ‘wear out’ periods for each item, as well as the cost of specific items.
There are special pays that apply to specific duties. These amounts are taxable, unless it was earned in a designated combat zone.
Members, who are required to jump out of aircraft in good order, are entitled to Jump or Parachute Duty Pay. Two rates of pay apply, regular and high altitude, low opening. One rate of pay will be applicable for a qualifying period. If a member qualifies for both types of parachute duty, the higher rate will be applied.
Members who are assigned to a combat zone will receive imminent danger pay at a specific monthly rate. This pay is non-taxable. One day spent in a combat zone will qualify for a full monthly amount, tax free.
Military pay is usually distributed on the 1st and the 15th day of any given month. If these days fall on a national holiday or on a weekend, payment will be made on the last working day prior to the holiday or weekend. It has become mandatory for pay to be distributed by means of direct deposit. It is important you ensure that your pay is paid into an account that can be accessed by authorized family members, such as a spouse, or parent if you are unmarried. This will ensure that your bills will be paid if you leave home for active duty.