U.S. Military Benefits Guide

Military pay is a composite of taxable base pay and various non-taxable allowances that depend on your rank, location, and family status. Understanding this distinction is the key to effective financial planning, as the non-taxable portion significantly increases your real take-home pay compared to a civilian with an equivalent gross salary. Your Leave and Earnings Statement (LES), available on myPay, is the authoritative document for your monthly income.

Core Components

• Base Pay: This is your fundamental, taxable salary, determined by your pay grade and years of service. It forms the basis for retirement calculations and TSP contributions.
• Basic Allowance for Housing (BAH): A non-taxable allowance for members living off-base. The rate is location-dependent and varies with rank and dependency status.
• Basic Allowance for Subsistence (BAS): A non-taxable allowance to cover food costs. It is a flat monthly rate, differing for enlisted members and officers.
• Special & Incentive (S&I) Pays: Additional, mostly taxable payments for specific duties (e.g., hazardous duty, flight pay, sea pay) or serving in designated locations.

Your housing benefits are one of the most powerful wealth-building tools available to you. The primary components are the non-taxable Basic Allowance for Housing (BAH) and the VA Home Loan, a mortgage benefit guaranteed by the Department of Veterans Affairs.

Core Benefits

• VA Home Loan: This is the cornerstone of military homeownership. It enables eligible service members and veterans to purchase a home with often no down payment required and without the need for Private Mortgage Insurance (PMI), saving thousands upfront and over the life of the loan.
• BAH Strategy: By choosing to live in housing that costs less than your full BAH entitlement ("pocketing your BAH"), you can create a significant, tax-free stream of income for savings, debt repayment, or investment.
• Multi-Unit Properties: The VA Loan can be used to purchase a property with up to four units, provided you live in one of them. This "house hacking" strategy allows you to use rental income from the other units to offset or even eliminate your mortgage payment.

The military provides comprehensive and low-cost healthcare and life insurance options that provide a critical safety net for you and your family.

Core Programs

• TRICARE: The military's healthcare program. Active-duty members are typically enrolled in TRICARE Prime (an HMO-style plan) at no cost. Families and reservists have other low-cost options like TRICARE Select (PPO-style) and TRICARE Reserve Select.
• Servicemembers' Group Life Insurance (SGLI): A low-cost term life insurance program that provides up to $500,000 of coverage. Enrollment is automatic, and the premiums are significantly lower than what is typically available on the private market for comparable coverage, especially for those in hazardous roles.
• Family SGLI (FSGLI): Allows you to extend life insurance coverage to your spouse and dependent children at a low cost.

The military retirement system is a two-part structure: a defined-contribution plan (the TSP) and a defined-benefit plan (the pension). Used correctly, it is a powerful engine for building long-term wealth.

Core Components

• Thrift Savings Plan (TSP): A 401(k)-style retirement savings account with some of the lowest fees in the world. You can contribute to a Traditional (pre-tax) or Roth (post-tax) account.
• Blended Retirement System (BRS): The modern pension system. For members in BRS, the government automatically contributes 1% of your base pay to your TSP and will match your contributions up to an additional 4%, for a total of a 5% match if you contribute 5% of your pay. This provides a portable retirement benefit even if you don't serve 20 years.
• High-3 Pension: The legacy system for those who joined before 2018 and did not opt into BRS. It provides a larger pension after 20 years of service but includes no government TSP matching.

Your military education benefits can be worth well over six figures, enabling you or your family members to earn a degree or certification with little to no debt.

Core Programs

• Post-9/11 GI Bill: This is the most powerful education benefit. It can cover the full cost of in-state tuition at public universities, a monthly housing allowance (MHA), and a stipend for books. Its value can be extended at private schools through the Yellow Ribbon Program.
• Tuition Assistance (TA): A benefit for active-duty members to pay for college courses *while still serving*. Using TA allows you to save your more valuable GI Bill for a future, more expensive degree program or to transfer it to a dependent.
• GI Bill Transferability: Eligible members with a sufficient service commitment can transfer their GI Bill benefits to a spouse or child, a benefit of immense financial value.

Federal laws provide powerful financial protections for service members, which can save you thousands of dollars in interest and fees.

Core Protections

• Servicemembers Civil Relief Act (SCRA): This law provides a range of protections, most notably the ability to cap interest rates on any pre-service loans (credit cards, auto loans, etc.) at 6% while on active duty.
• Military Lending Act (MLA): This law protects service members from predatory lending practices and has a powerful secondary effect: many premium credit card issuers (like American Express and Chase) waive their high annual fees for active-duty military members, granting access to luxury travel perks for free.
• Military-Friendly Banking: Institutions like USAA and Navy Federal understand the military lifestyle and offer benefits like early direct deposit of military pay and global ATM fee rebates.

Your military status provides unique tax advantages that reduce your overall tax burden.

Core Benefits

• Tax-Free Allowances: Your BAH and BAS are not subject to federal income tax, effectively lowering your taxable income.
• Combat Zone Tax Exclusion (CZTE): For any month you serve in a designated combat zone, your enlisted pay is entirely exempt from federal income tax. This creates a powerful opportunity to save aggressively in a Roth TSP with tax-free dollars.
• State Tax Residency: The SCRA allows you to maintain your original home state as your legal residence (domicile) for tax purposes, regardless of where you are stationed. This can result in significant tax savings if your home state has no income tax. The Military Spouses Residency Relief Act (MSRRA) provides similar protections for spouses.

The military offers a network of programs designed to support the well-being and careers of military families.

Core Programs

• DEERS Enrollment: The Defense Enrollment Eligibility Reporting System is the gateway to all family benefits. Spouses and children must be enrolled in DEERS to receive a military ID card and access TRICARE, base facilities, and more.
• MyCAA Scholarship: The My Career Advancement Account provides up to $4,000 in tuition assistance for eligible military spouses to pursue licenses, certifications, or associate degrees in high-demand fields.
• **Childcare Subsidies:** The DoD provides access to high-quality, affordable childcare through on-base Child Development Centers (CDCs) and fee assistance programs for community-based care.

Part-time service in the Guard and Reserve comes with a unique set of benefits tailored to a dual military-civilian career.

Core Benefits

• Drill Pay & Retirement Points: You earn part-time income through weekend drills and annual training, and each day of participation earns points towards a valuable retirement pension.
• TRICARE Reserve Select (TRS): An extremely affordable, premium-based PPO-style health insurance plan that is often significantly cheaper than comparable civilian employer plans.
• Benefit Eligibility on Orders: When activated for federal service (e.g., mobilization), you and your family receive the same benefits as active-duty members, including full pay, BAH, and TRICARE Prime at no cost.

Your benefits do not end when you take off the uniform. The Department of Veterans Affairs (VA) provides a lifetime of support.

Core Programs

• VA Disability Compensation: A tax-free monthly benefit for veterans with service-connected disabilities. It is crucial to file your claim through the Benefits Delivery at Discharge (BDD) program 90-180 days *before* separating for the fastest result.
• VA Healthcare: Eligible veterans can enroll in the VA healthcare system for low-cost or no-cost medical care.
• Post-Service Benefit Use: Your VA Home Loan entitlement is lifelong, and your Post-9/11 GI Bill can be used for up to 15 years after separation, providing a powerful launchpad for your civilian life.

Official Sources

• Defense Finance and Accounting Service (DFAS) - For pay tables and LES information.
• Defense Travel Management Office (DTMO) - For BAH, OHA, and COLA rates.
• Department of Veterans Affairs (VA) - For home loan, education, and life insurance benefits.
• TRICARE - For all military healthcare plan information.
• Thrift Savings Plan (TSP) - For retirement account management.
• DoD Military Compensation - For retirement system details (BRS, High-3).
• Consumer Financial Protection Bureau (CFPB) - For SCRA and MLA protections.
• Military OneSource - For free financial counseling and MilTax software.

Disclaimer

This guide is for educational purposes only and does not constitute legal, tax, or investment advice. Policies change frequently—always verify details using the official sources linked above and your installation support offices (finance, legal/JAG, housing, education).