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You are here: Home / Military Mondays / Pay vs Allowances: What’s the Difference?

Pay vs Allowances: What’s the Difference?

July 10, 2017 MilitaryDollar Leave a Comment

Pay vs Allowances

When I started this blog, one of my goals was to make military compensation easier to understand. That’s why I’ve been writing posts like the one on the Personal Statement of Military Compensation, and the one on the Leave and Earnings Statement. If you understand those things, you will hopefully better understand how you are paid.

This post is in a similar vein, but I wanted to focus more on the why, here. Specifically, why are there so many different types of entitlements??? Why don’t we just make a flat amount? It’s the military after all, right? Isn’t our pay supposed to be…you know…uniform?

The answer, of course, is no. Not really. Our base pay is relatively the same, if you are talking about people in the same rank and around the same time in service. But the rest of the pays and allowances are there to compensate you for other things. Sometimes it’s for a special skill you bring to the table. Sometimes it’s for having children.

There are far too many pays and allowances to cover here, so I’ll go over some of the most common. If you have questions, there are a few links throughout to direct you to more information. You can also just start at the DOD Military Compensation page and search for the information you need.

What is “Pay”

At the most basic level, pay is the money provided to you, the military member, for doing your job. There are a variety of pays available.

Basic Pay is the fundamental component of your military pay. Everybody gets Basic Pay, unless they have done something that caused it to be taken away. It is typically the largest component of your pay, as well. Basic Pay is determined by your grade (usually but not always the same as your rank) and your time in service.

Special and Incentive (S&I) Pay

Special and Incentive (S&I) Pays allow the various military services to compensate members who perform specific needs. They can also be used for Force Management issues that aren’t adequately addressed through Basic Pay. Another way to phrase that is “they will pay you more to do jobs people don’t want to do, including dangerous ones.” S&I pay can also be used to incentivize service members into developing skills deemed important to national security.

There are currently over 60 S&I pays authorized by law. Generally speaking, the eligibility for each pay, as well as the amount, are set in law.

Some of the most common S&I Pay categories are

  • Hardship Duty Pay – paid for hardship locations, missions, and tempos.
  • Hostile Fire Pay/Imminent Danger Pay – $225 per month, paid when the member is subject to hostile fire or mine explosions, in an area where those things might endanger the member, or if the member is killed, injured, or wounded by hostile action. You cannot receive both Hostile Fire Pay and Imminent Danger Pay in the same month.
  • Assignment Incentive Pay – Paid for unusual assignment circumstances. Examples include extending tours in Iraq, Kuwait, and Afghanistan under certain circumstances. This is a very popular way for the services to compensate members. A member can receive up to $3,000 each month in Assignment Incentive Pay.
  • Hazardous Duty Incentive Pay – Pay for performing certain duties, such as explosives demolition, parachute jumping, aircrew, etc. Varies based on the duty up to $250 per month.

For the full list of S&I Pays, you can check out the list here.

What are “Allowances”

Allowances are money provided for a specific reason. You receive them when the government doesn’t provide for a specific need.

I know you are all familiar with the Basic Allowance for Housing and the Basic Allowance for Subsistence. Those cover – you guessed it – housing and food. If all of your food and housing needs are met (through the chow hall and on-base housing, for instance) then you don’t receive the allowance. Yeah, the privatization of housing has kind of messed with that a bit, but you get the point.

Other allowances work the same way. Each one is intended to pay for a specific thing. Of course, the money is paid directly to you so if you don’t spend the exact same amount as you are given, no one will know. But if you are given one of these allowances and then found to be lacking (::cough:: uniforms! ::cough::)…maybe just use the allowance as it is intended.

Clothing

There are four main clothing allowances – initial, replacement, maintenance, and extra. Both officers and enlisted members are entitled to an initial clothing allowance when they enter the service. Enlisted members also receive an annual replacement allowance. If you are required to wear civilian clothing as part of your duties, you may also receive an Extra Clothing Allowance known as the Civilian Clothing Allowance.

Dislocation

Dislocation Allowance is meant to reimburse you, in part, for the expenses you incur when moving your household for a PCS, evacuation, or when otherwise ordered by the government. This is not designed to pay for the move itself – that will either be paid by a government contract or a reimbursement if you do a Do-It-Yourself (DITY) move. Instead, Dislocation Allowance pays for things like the security deposit that isn’t fully returned, buying a month’s worth of restaurant meals while your household goods are mysteriously delayed, and restocking your cleaning supplies because the movers won’t transport them.

Family Separation Allowance (FSA)

If your family can’t live with you at your permanent duty station, you may receive FSA. The point of FSA is to pay for additional costs you might incur if your family can’t live with you. I haven’t found a list of what those costs are “supposed” to be, but some I’ve heard through the years are things like additional child care, home maintenance, etc.

You will not receive FSA if the government is willing to pay for your dependents to travel with you and you elect not to. FSA is reserved for situations where you dependents cannot go with you, such as unaccompanied remote tours, deployments, ship duty, or a medical condition. FSA kicks in after 30 days for TDYs and ship duty. It is payable at a rate of $250 per month, pro-rated to $8.33 each day for periods less than a month.

Family Subsistence Supplemental Allowance (FSSA)

Service members with large families and qualifying levels of income can receive an additional allowance to help pay subsistence costs. Normally I’d link to the page for more information here, as this is a valuable allowance for some of our lower ranking troops. Unfortunately, all of the links on official websites appear to be broken! If you or someone you know needs help with this contact your First Sergeant or service equivalent, Commander, or a wise senior NCO for more information.

Are There Any Other Differences?

As you know, your Basic Pay is taxable income. Unless you are deployed to a Combat Zone Tax Exclusion area, it is eligible to be taxed by the federal government. Depending on your home state, you might also pay state income taxes.

Allowances usually are not taxable. For instance, your housing and subsistence allowances are tax-exempt from both income and Social Security taxes. However, some allowances are subject to tax.

If you receive a Cost of Living Allowance (COLA) while stationed CONUS, it is taxable. Why, you may ask? Get this. There is a law that every allowance created after 1986 will be taxable. CONUS COLA became a thing in 1995, and therefore it is taxable.

Do you receive one of the lesser known pays or allowances? Let us know how it works in the comments!

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