How Military Pay Works

The 1st and the 15th. Active servicemembers know these days of the month represent the standard pay dates for the military.

However, understanding the ins and outs of military compensation can be confusing. If the military is on your list of career goals, you need to know how military pay works, instead of simply knowing when you get paid.

That’s why your favorite military-to-civilian career service professionals at Empire Resume are here to show you how military pay works.

Military Wages Go Up Each Year

Service members usually see a pay increase each year, thanks to the management of the Department of Defense.

Because of inflation, military pay rates go up annually to compensate for the increased cost of living and to keep service members on track with civilian salaries.

So come January 1, 2021, the men and women of the U.S. Armed Forces will see a 3 percent military pay raise.

But the pay raise is not always substantial.

Historically, from 2011 to 2016, the military pay increase never grew about 1.7 percent, according to an article in MilitaryTimes. The 2020 pay hike of 3.1 percent was the largest military pay increase since 2010.

The Structure of Military Compensation

Military pay is determined by several factors such as a service member’s pay grade or rank, time of service, job title and duties, location, and marital status.

Essentially, military pay boils down to four primary categories:

Basic pay or drill pay
Allowances
Special and incentive pay (S&I)
Retirement

For purposes of this article, we’ll focus our attention on basic pay, allowance, and special and incentive pay. Retirement becomes available once you serve for several years, usually at least 20 years, and transition back into civilian life.

Now, let’s take a look at the types of pay in detail below.

Basic Pay for Active Duty

One of the major differences between a military officer and enlisted is the amount of money you can earn, starting with basic pay.

Basic pay, also known as base pay, is the greatest component of military pay for active duty members. Simply put, it’s the biggest piece of the money pie.

Base pay is a fixed amount of taxable income earned each month, excluding any other types of pay. Your rank and years of service determines the amount of base pay you will receive.

In another article, we mentioned the higher you go up in rank or pay grade, the higher your earnings will be. A military officer is paid more than the enlisted level equivalent.

For example, the lowest ranking enlisted member, like a private, with 1 year of service will earn a base pay of $1,733 each month. The lowest ranking officer, like a lieutenant, with 1 year of service will earn $3,287 each month in base pay. That’s quite a difference!

For more information on the amount base pay for each rank, check out Basic Pay Charts for 2020.

Always remember, base pay is the bulk of where military income comes from, but it’s only a portion of the monthly income.

No matter which branch of the U.S. Armed Forces you choose, you will receive base pay. Learn more about the basic pay for each military branch below:

Drill Pay for Guard and Reserve Members

If you’re interested in joining the National Guard or Reserve, you’d receive what’s called a monthly drill pay, which is equivalent to base pay. Reserve paydays still fall in line with the normal pay dates mentioned above.

You’d be paid according to the number of drill weekends you work or attend in a month. Majority of Guard and Reserve members perform one weekend of drill each month along with two weeks out of the year. Each weekend counts as four drill periods.

To see how much drill pay you could earn as a Reservist or Guards member, review the 2021 proposed drill pay chart provided by Military.com.

Military Allowances

In addition to base pay, the opportunity to earn allowances is a great benefit of joining the military.

Allowances is the second greatest component of military pay, and many times it is not subject to income tax.

Allowance pay covers specific needs like food and housing. According to the Department of Defense, monetary allowances are provided when the government does not provide for that specific need.

For example, newly enlisted military members who are single and do not have children usually live on the military installation in the dorms or barracks called military housing. Since some military housing conditions do not meet the federal minimum housing standards, the military provides a partial housing allowance.

For married military members with dependents (either a spouse or children), they may receive the keys to a house on base, rent free. But when there’s not enough housing on the installation, married military members will receive a monthly housing allowance (Basic Allowance for Housing or BAH) to rent or even buy a place off base or off post.

The best part about getting an allowance in the military is that most allowances are non-taxable.

For your convenience, we’ve created a list of the most popular allowances you may receive in the military, according to the Department of Defense:

Basic Allowance for Housing (BAH): This allowance offsets the cost of housing when you cannot receive military housing. The amount of BAH depends on your location, pay grade, and whether or not you have dependents.

Basic Allowance for Subsistence (BAS): This allowance offsets the costs of food for the service member, not dependents. Each year, the amount of BAS is changed based on the price of food as measured by the USDA’s food cost index.

In 2020, officers received $256.68 of BAS each month while enlisted members received $372.71. Enlisted members receive more BAS since their base pay is much less.

Dislocation Allowance (DLA): This allows provides reimbursement to any servicemember for expenses in relocating the member’s household due to permanent change of station (PCS), moves for the Government’s convenience, and for incidents requiring evacuation.

Family Separation Allowance (FSA): This allows provides $250 per month for service members who are assigned to a location and separated from their families.

Because the family members cannot travel with the service members and are forced to be apart, the government provides this expense.

For example, if a Navy sailor is on a ship at sea away from the home port for more than 30 days, the member will receive FSA.

In addition to the allowances mentioned above, you may be able to receive a clothing allowance as well.

Special and Incentive Pay

Special and Incentive (S&I) pay kicks in when military members qualify for this type of pay. Sometimes, these additional funds are offered as part of recruitment efforts, while others are given because of a certain occupation, skill, or dangerous duty conditions.

According to the Department of Defense, there are currently over 60 S&I pays authorized by law.

Some of the most popular types of specialty and incentive pay includes:

Marriage pay/dependent pay: Although this type of pay is not officially known as marriage pay, military members receive a one-time bump in pay as part of housing (BAH) and cost-of-living allowances after getting married.

What about children? When a service member has a child, with more than 50% custody of the child, the member will receive just a one-time bump, no matter the number of children the member has. Having another child, does not warrant another increase in pay.

But when stationed in a location where the cost-of-living-adjustment is paid, it is paid per family member. So, in this case, having children can put a little extra money in your pocket.

Hazardous Duty Incentive Pay (HDIP): Also known as combat pay, this type of pay provides military members with a monthly amount of $150 for being deployed to a combat zone.

It’s important to keep in mind that monies earned while performing duty in a combat zone is tax-exempt. The IRS can exclude your income from taxation if you are an eligible member who served in a combat zone.

HDIP rates and details concerning HDIP requirements and eligibility can be found in DoD FMR Vol. 7A, Chapter 24.

Hardship Duty Pay (HDP): This type of pay is paid to members outside of the United States when living conditions are below the standard most members experience inside the U.S.

Rates are paid in increments of $50, $100, or $150 depending on the level of hardship in an area.

For example, HDP is $150 in Haiti, whereas HDP in Bahrain is $50.

In addition to these common types of special and incentive pay, you can be specially compensated for being a military pilot, a healthcare professional, Navy SEAL, and for other specialty professions.

Or if you decide to first attend college instead of the military and be a part of the Reserved Officer Training Corps program, you could receive a Senior ROTC monthly stipend.

See How Much You Could Make in the Military

For an in-depth look at how much you could receive if you become a part of the military, check out the military pay tables and information by the Defense Finance and Accounting Service (DFAS), who manages payment services for the U.S. Department of Defense.

If you enjoyed this article, come back to Empire Resume’s military blog next week for military related career advice.

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Dr. Phillip Gold is President/CEO of Empire Resume and has vast experience writing resumes for service-members transitioning from the military into civilian roles. He served as a Captain in the U.S. Air Force responsible for leading nuclear missile security. Phillip is a Certified Professional Resume Writer and holds a BA in Communications from The Ohio State University, an MS in Instructional Technology, an MBA in Finance, and a PhD in Finance.

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