Allowances: Cost-of-Living Allowance - Military Pay & Allowances - Military Times

Allowances: Cost-of-Living Allowance

ConUS COLA. A cost-of-living allowance is paid to military personnel assigned to high-cost locations in the continental U.S., defined as the 48 contiguous states and excluding Alaska and Hawaii.

Payments are based on rank, years of service, location and whether the service member has dependents. Monthly rates can run from $18 to more than $600 in the costliest cities. The money is intended to cover higher transportation, food, clothing and other nonhousing costs in areas where those costs exceed the national average by more than 8 percent. Higher housing costs in these areas are covered by the Basic Allowance for Housing.

For 2008, the taxable allowance is paid in 56 high-cost locations. It is paid automatically by service finance offices based on the member’s military duty ZIP code.

Overseas COLA. The overseas cost-of-living allowance is a supplement to regular pay that reflects higher prices overseas for goods and services. The nontaxable allowance varies with location, rank and number of family members. Rates are reviewed periodically and adjusted to reflect fluctuations in costs as well as foreign currency exchange rates.

About 250,000 service members in more than 600 locations receive overseas COLA, at a cost of about $1.7 billion per year.