A Comprehensive Guide to Military Pay

Military pay is not all that bad—but it isn't all that great, either. It would be hard for a high school recruit with no work experience to find a better starting wage. However, for an enlisted member with years of experience, trained in a critical technical specialty, it's not all that great when compared to wages for a similar civilian job.

Military Base Pay Is Not Tax-Free

Everyone gets the base pay, and it's the same regardless of what military service you are in. It's based on an individual's rank and the number of years you've been in the service.

Base pay is taxable unless you are actively serving in a designated tax-free combat zone. You'll pay federal income tax, Social Security, Medicare, and state taxes on your base pay. Some states do not tax military pay, while a few others won't tax it unless you are stationed within the state. The state in which you list with military finance as your "official residence" will determine the state tax rules you fall under.

Guard and Reserves

During basic training and job school, or any other time performing full-time duty (such as the two weeks every year of active duty training, or if mobilized), Guard and Reserve force members receive the same pay as active-duty members. During weekend drills, however, the pay scale is different. Guard and Reserve members receive four days worth of pay for each weekend drill.

Annual Pay Raises

Each year, Congress passes the Defense Appropriations Act and the Defense Authorization Act, which contain pay raises for military personnel. It gets adjusted to help keep military pay from lagging too far behind civilian pay, but that is dependent upon politics.

Military Pay vs. Civilian Pay

Whether or not you consider military pay to be fair compensation when compared to civilian pay depends on several factors, including the specific military job that you sign up for. Some of the techie jobs are underpaid compared to the civilian sector, as well as a few of the comparable management (officer/senior NCO) jobs. But when you look at total compensation, a lot of jobs are pretty close on the pay scale.

Look at America's Job Bank online and type in your MOS/AFSC/Rating (or the one you're considering, for those thinking of joining the military) in the area you want to work. The range of pay for most of the jobs is pretty surprising, and when you consider the additional qualifications many civilian jobs require, the military is even more of an advantage because it hires you without experience or training—and provides that to you, free of charge.

For someone recently out of high school, with limited work experience, the military pay scale is more than fair. Once a person gets a college degree (although the military will pay for that), plus technical training (paid for too), plus 8-10 years of job experience, it starts to fade a bit for some fields. But, for jobs like Cook, Laundry and Bath Specialist, Supply, and Admin, the pay is pretty comparable.

For combat arms, you can't find a civilian equivalent, so what can you compare it to? If you want to be a tanker or submariner, the military is the only game in town, and you're getting the intangible benefits of a unique job you love to do.

Your Pay and Your First Paycheck

Direct deposit is mandatory for military pay. You should already have a bank account set up before you leave for basic training, and bring your account information and an ATM/debit card with you. 

During your in-processing, you will complete paperwork to begin your military pay. Military personnel receive pay on the 1st and 15th of each month. If those days fall on a non-duty day, you are paid on the preceding duty day. Your pay is direct-deposited into your bank account.

So, when will you receive your first paycheck? Estimate that the first paycheck won't be deposited until a full 30 days after arrival. If you're paid before that, it's an unexpected surprise, and if it takes the entire 30 days, it's what you were expecting anyway.

In any case, your first paycheck will contain all the pay you have coming to you at that point. For recruits without dependents, that means base pay, only. For those with dependents, it means base pay and housing allowance. Your first paycheck will be pro-rated to the number of days you've been on active duty. Of course, taxes and other deductions (such as deductions for non-issue items, such as running shoes, soap, shampoo, laundry, etc.) are taken out.

Housing Allowance and Food Allowance

In certain circumstances, military members are paid an allowance to live off-base, as well as an allowance to purchase food.

Special Pay and Allowances

In addition to Basic Pay, Basic Allowance for Housing, and Basic Allowance for Subsistence, members of the military may receive special or incentive pays, depending on individual circumstances.

Medical & Dental Officer Pay

Depending on their years of service, medical and dental officers receive variable special pay. Additionally, board-certified medical officers and dental officers receive more The directive governing Medical Officer Pay is the Defense Pay Regulation, Volume 7A, Chapter 64. The directive governing Dental Officer Pay is the Defense Pay Regulation, Volume 7A, Chapter 6.

Veterinarians and Optometrists

Vets and eye doctors only get extra-incentive pay. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 7.

Enlisted Special Duty Pay

The secretary of the particular service concerned may authorize special duty pay to enlisted members performing designated special duties. Examples of some jobs that qualify for this special pay are military recruiters and (in the Air Force), First Sergeants. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 8.

Diving Pay

Individuals who are qualified to dive, and who are placed on special orders to perform diving duties as a part of their normal military duties, are entitled to diving pay. The pay varies significantly depending on experience level, type of duty, and the branch of service. It's not surprising that the maximum amount is received by Navy SEALS. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 11.

Nuclear Officer Pay

Naval nuclear officers receive both an initial bonus and yearly incentive pay for extending their service commitment. The yearly incentive pay is determined by the Secretary of the Navy. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 12.

Navy Commanders

Navy officers in the pay grade of O-6 and below receive a monthly special pay when assigned duties as a commanding officer over a ship or unit designated by the Secretary of the Navy. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 13.

Overseas Extension Pay

Enlisted members, depending on location and occupation, may be authorized to receive a monthly payment for voluntarily extending their duty in an overseas area. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 14.

Aviation Continuation Pay

This pay, available to aviation (flying) officers, below the pay grade of O-6, who extend their service obligation, may receive annual incentive pay. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 15.

Engineering and Scientific Officer Continuation Pay

Commissioned officers, serving as engineers or scientists, may receive a continuation pay for extending their service commitment. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 16.

Foreign Duty Pay

Enlisted members assigned to areas outside of the 48 contiguous states and the District of Columbia are authorized to receive foreign duty pay. The amount of pay is based on rank. It's interesting to note that an individual cannot receive this payment if they are stationed in a state or country of which they are a resident. So, for example, a member of the military who is a legal resident of Hawaii would not receive this pay if stationed in that state, but another military member who is not a resident of Hawaii would receive the pay.

Certain locations have been designated hardship duty pay locations, and members stationed there can receive more per month. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 17.

Sea Pay

Military members embarked on a ship are authorized sea pay, ranging in amounts from $50 per month to $620 per month. The amount of entitlement is based on rank and number of years of logged sea duty. Additional amounts may also be awarded to personnel who have been embarked on a vessel for more than 36 consecutive months. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 18.

Foreign Language Proficiency Pay

Military members who have received training in a foreign language and are assigned to a job requiring foreign language skills receive a monthly Foreign Language Proficiency Pay. It depends on the level of proficiency maintained. Additionally, other military members who are proficient in a language that the Department of Defense considers to be critical may also receive this monthly payment, as long as they maintain proficiency in the language. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 19.

Aviation Retention Bonus

An aviation officer who makes a written commitment to remain on active duty beyond their commitment may be authorized to receive an Aviation Retention Bonus depending upon the number of additional years they commit to. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 20.

Flight Pay

Flight pay is authorized for military members who are required to participate in frequent and regular aircraft flights, depending on duty status and rank. Officers receiving Aviation Career Incentive Pay are not authorized to receive flight pay. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 22.

Submarine Pay

Naval personnel assigned duty on a submarine are authorized to be paid Submarine Pay. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 23.

Hazardous Duty Pay

This is commonly confused with "Hostile Fire Pay," but in actuality, they are two entirely separate things. Hazardous duty pay is paid to personnel who perform duties that by their very nature may be hazardous. This includes parachuting, flight deck duties, demolition duty, experimental stress volunteers (acceleration, low pressure, high pressure, etc.), duty involving toxic fuels or pesticides, and duties involving dangerous viruses, bacteria, or chemical weapons. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 24.

Family Separation Allowance

Military members who are separated from their legal dependents for a period in excess of 30 days, to a location where the dependent(s) are not authorized to accompany them at government expense, are authorized to receive family separation allowance. There are two types of allowance: FSA-1 and FSA-2. A member may receive both. Type 1 is payable when a member may not reside on base in their new location. The amount is equal to Basic Allowance for Housing at the "without dependents" rate. It's designed to help pay for rent and utilities for the additional household. FSA-2 is payable when the member is apart from legal dependents for a period in excess of 30 days. This is designed to provide assistance in paying for the incidental expenses incurred for maintaining a separate household away from family members. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 27.

Combat Pay

A member assigned to or deployed to a combat zone receives combat pay. Being assigned to or working in a combat zone also triggers a tax advantage.

Clothing Allowance

There are two types of clothing allowances: initial and annual maintenance. The initial clothing allowance is paid when, for some reason, the service is unable to issue a military member's initial allotment of uniforms. The allowance is based upon the retail cost of uniform items and differs for each service, and is different for males and females. Additionally, there are numerous supplemental clothing allowances for special duties (such as band), or for those required to wear civilian clothing on duty. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 29. (Chapter 30 for Officers).

Special "Personal" Allowances

Here's an interesting "tidbit:" Military members in certain "special" positions, receive a special personal allowance to help with incidentals and entertainment expenses. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 31.

Severance Pay

Members with more than six years but less than 20 years of service, who receive an honorable discharge while being separated from the service involuntarily (drawdown, "up-or-out system," etc.), receive a severance pay (also called involuntary separation pay) equal to 10 percent of their annual basic pay, times the amount of years of service they have completed. There are several minor restrictions on this pay, and instances of what covers "voluntary," or "involuntary" separations, which are too numerous to cover in this article. Specific questions should be directed to the Defense Finance and Accounting Service. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 35.

Hardship Duty Pay

Military members assigned to certain "hardship" assignment locations can receive Hardship Duty Pay. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 17.

Retirement Pay

Military members who serve for 20 or more years and retire will receive a portion of their base pay each month for the rest of their lives. 

Reenlistment Bonuses

The purpose of a reenlistment bonus is to entice members to reenlist into jobs that are experiencing critical shortages.

In general, the greater the reenlistment bonus, the harder time the service is having convincing people to reenlist in this job. This is usually for one of two reasons:

• This same job pays extremely well in the civilian world, which entices many experienced people to get out and make more money.
• The job sucks.

It's probably best not to choose a job based upon enlistment/reenlistment bonus amounts. Such money is spent fast and is then gone. It's better to base your preferences based on your personal interests. You'll be much happier in the long run.

Taxes

In general, unless earned in a designated combat zone, all military pay items are taxable. Military allowances (such as housing allowance, overseas housing allowance, family separation allowance, basic allowance for subsistence) are not taxable by either the federal or state governments. Different states have different rules for taxing military pay. The governing directive is the Defense Pay Regulation, Volume 7A, Chapter 44.