Non-Taxable Military Pay and Benefits

Some several military benefits and allowances are not taxable by local, state or federal governments. This article lists many of these benefits.
Advertising Disclosure.

Advertiser Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone. This article may contain links from our advertisers. For more information, please see our Advertising Policy.

The Military Wallet has partnered with CardRatings for our coverage of credit card products. The Military Wallet and CardRatings may receive a commission from card issuers. Some or all of the card offers that appear on The Military Wallet are from advertisers. Compensation may impact how and where card products appear, but does not affect our editors’ opinions or evaluations. The Military Wallet does not include all card companies or all available card offers.

nontaxable military income

Tax season is always stressful. Fortunately, several places provide free tax preparation for military members. If you are looking to do your own taxes, it helps to understand how the military pay system works.

Military pay can be complicated. There are a lot of different rules regarding military pay and which benefits, bonuses and special pays are taxable and which are not. This series of articles will focus on clearing up some of the confusion.

Table of Contents
  1. Non-Taxable Military Pay and Benefits
  2. Living Allowances
    1. Base Housing and Basic Allowance for Housing (BAH)
    2. Overseas Housing Allowance (OHA)
    3. Basic Allowance for Subsistence (BAS)
    4. Cost-of-Living Allowance (COLA) While Living Overseas
  3. Family Allowances
  4. Moving Allowances
  5. Death Allowances
  6. In-Kind Military Benefits
  7. Other Non-Taxable Payments and Benefits

Non-Taxable Military Pay and Benefits

Your base military pay is taxable unless you are deployed to a tax-free combat zone. There are several rules regarding how your pay is taxed in these circumstances. In general, your base pay is tax-exempt if you are enlisted, and if you are a commissioned officer, your pay is tax-exempt up to the amount of the highest enlisted pay grade.

Other than that, your base pay is taxable.

However, certain benefits are considered non-taxable income. By non-taxable, we mean they are not included in gross income. Please keep in mind that this is not an all-inclusive list and is subject to change. Always check with an accountant or your base finance office for further details.

Living Allowances

Base Housing and Basic Allowance for Housing (BAH)

Military members either receive base housing, which is not taxed or a housing allowance to cover the cost of their housing. The housing allowance is called basic allowance for housing (BAH) and is based on the service member’s pay grade, whether or not they have dependents, and local market conditions.

This article covers current BAH rates. BAH is not intended to cover all housing costs. Members who receive BAH can keep the difference if their housing costs are lower than their total BAH payments.

Note: If you itemize your taxes, mortgage interest and real estate taxes remain deductible even if you pay these expenses with your BAH.

Overseas Housing Allowance (OHA)

Service members who serve overseas are also entitled to either military housing or an overseas housing allowance. Like BAH, the OHA is based on the member’s pay grade, whether or not they have dependents and local market conditions. The service member’s OHA is capped by the amount of their rent (in other words, you can’t pocket the difference if your housing allowance is more than your rent).

Basic Allowance for Subsistence (BAS)

The basic allowance for subsistence is a food allowance paid to members who are not eligible to eat in the base dining facilities. This amount is greater for enlisted members than officers.

Cost-of-Living Allowance (COLA) While Living Overseas

Some locations are more expensive to live in than others, which is why the military offers a cost-of-living adjustment to certain military members living in high-cost-of-living locations. COLA is based on location, the member’s pay grade, and whether or not they have dependents.

  • Service members who live in high-cost-of-living locations outside the continental United States (OCONUS) may be eligible for OCONUS COLA, which is a non-taxable benefit.
  • Some members who live in high-cost-of-living locations in the continental United States (CONUS) are also eligible for CONUS COLA. However, CONUS COLA is taxable.

Family Allowances

Moving Allowances

  • Permanent change of station (PCS) moves
  • Dislocation allowance
  • Relocation or storage of household goods
  • Mobile home, trailer or automobile shipment during PCS moves
  • Temporary lodging allowance (TLA)
  • Certain military base realignment and closure benefits

Death Allowances

In-Kind Military Benefits

Other Non-Taxable Payments and Benefits

These benefits add up to a lot of money each year, and the fact they are not taxable is just another example of our government looking after its troops. Thanks to each of you who serve.

See these related articles regarding military pay and taxes:

About Post Author

Get Instant Access
FREE Weekly Updates! Enter your information to join our mailing list.

Reader Interactions

Leave A Comment:


About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

The Military Wallet is a property of Three Creeks Media. Neither The Military Wallet nor Three Creeks Media are associated with or endorsed by the U.S. Departments of Defense or Veterans Affairs. The content on The Military Wallet is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on The Military Wallet should not be attributed to the Dept. of Veterans Affairs, the Dept. of Defense or any governmental entity. If you have questions about Veteran programs offered through or by the Dept. of Veterans Affairs, please visit their website at The content offered on The Military Wallet is for general informational purposes only and may not be relevant to any consumer’s specific situation, this content should not be construed as legal or financial advice. If you have questions of a specific nature consider consulting a financial professional, accountant or attorney to discuss. References to third-party products, rates and offers may change without notice.

Advertising Notice: The Military Wallet and Three Creeks Media, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet; For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked and this compensation may affect how, where and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings or lists are fully comprehensive and do not include all companies or available products.

Editorial Disclosure: Editorial content on The Military Wallet may include opinions. Any opinions are those of the author alone, and not those of an advertiser to the site nor of  The Military Wallet.