Military Pay Overview

Types of Military Compensation

There are three main types of military pay: basic pay, allowances, and Special and Incentive Pays.

Basic Pay

  • This type of pay is the main component of a Service member's compensation. The amount is determine by grade and years of service. Basic pay is a taxable income, with potential exceptions if serving in a designated combat zone. 

Allowances

  • Allowances are the second most important element of military pay. Allowances are additional compensations used to address specific needs, such as food or housing. The allowances available, as well as the allowances amounts, vary among Service members. Unlike basic pay, most allowances are not taxed. 

Special and Incentive Pays (S&I)

  • S&I pays are additional pays designed to provide compensation for special qualifications or service conditions. Similar to basic pay, S&I pays are taxable with potential exceptions if serving in a designated combat zone.  

Military Pay Tax Information

Specific components of military pay offer built-in tax advantages. For example, most allowances are tax-exempt and certain hardship circumstances can change normally taxable pay into tax-exempt. Military spouses have multiple tax treatment options for their earned income and Service member can access free tax preparation and filing support from military-tax specialists. Visit Tax Information to learn more about:

  • Combat Zone Tax Exclusion (CZTE)
  • IRS Tax Resources for the Armed Forces
  • Tax Preparation and Filing Support
  • Military Spouses Taxation Under the Servicemembers' Civil Relief Act (SCRA)
  • Taxable Fringe Benefits

Retired Pay Information

Annual Pay Information