Job Growth Trend Or Outlook
The demand for military personnel rarely goes down. The military has an ongoing goal of maintaining a sufficient level of forces to fight, deter and overcome threats and conflicts at the same time. When the economy is good, the Army must compete with private companies for qualified candidates. In times of war, all of the military branches need to recruit more soldiers.
In short, the Army will always have jobs available and a need for more recruits.
Joining the Army, earning a good income, getting specialized training and receiving free health and medical coverage are enticing benefits for a lifetime path to success and financial security. With skyrocketing costs of going to college, pursuing a career in the Army is an attractive way to go.
Why Is It Important For Every Service Member To Understand Their Pay
The United States military is a massive operation that distributes paychecks to around 1.4 million service members twice a month. A great deal of the data entry tied to those dispersed payments is handled internally by other service members, some of whom are also learning the ropes of their jobsjust like you. That means that theyre sometimes prone to making mistakes, and those mistakes can affect how youre paid.
State Tax Withholdings For Military Retirement Pay
It is not much about state taxes. This is because most states do different things with military retirement pay, or they dont tax it at all. There is 23 country that either doesnt have an income tax or dont tax military retirement pay, and above 20 that offer special considerations on pensions or military retirement income. Based on the state you live in, make a decision about your situation.
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Bigger Military Pay Raise On Lawmakers Agenda For 2022
House lawmakers will look at boosting service members pay significantly in coming years as part of their annual defense budget discussions in 2022, according to the top Republican on the House Armed Services Committee.
Rep. Mike Rogers, R-Ala. and ranking member of the panel, said during a Heritage Foundation event on Wednesday that the issue of military pay will be a top priority in next years discussions, both for Republicans and Democrats on the committee.
One of the things that Chairman Adam Smith and I have been talking about and we intend to lean into next year is significantly increasing compensation and benefits packages, particularly for enlisted personnel, he said.
We want to maintain a professional military and we need to compensate them as professionals. And we arent doing that right now, particularly in the enlisted ranks. So youre going to see us making some efforts to address some of those concerns.
Rogers office did not answer requests for specifics on what those compensation changes will include.
House and Senate lawmakers are currently finalizing plans for the fiscal 2022 defense authorization bill, which includes a 2.7 percent pay increase for all troops. That follows both the White House recommendation for the military pay boost and the federal formula for annual increases, based on the growth of salaries in the private sector.
Other Pays And Allowances
The local finance office can provide additional information about the many other special pays and allowances available in special circumstances or to service members performing certain duties. Examples of special pays and allowances include but are not limited to:
The tax implications of the various military pays and allowances can prove complicated. Some types of military compensation are taxable and others are not.
A useful rule of thumb: If the entitlement contains the word pay in the title i.e., Basic Pay it is considered taxable income unless the service member is serving in a designated tax-free combat zone. In a combat zone, all income earned by enlisted service members is tax free, including assignment and re-enlistment bonuses.
Officers may exclude from income tax only the amount equal to the highest monthly rate of enlisted pay plus their $225 Imminent Danger Pay. If the entitlement contains the word allowance in the title i.e., Basic Allowance for Housing it usually is nontaxable.
The following example illustrates monthly pay and how that pay is taxed for a third-year E-4 with a family, when deployed to Iraq from his/her duty station at Joint Base Lewis-McChord, Wash.:
In garrison: $2,507.10 basic pay + $386.50 BAS + $1,908 BAH = $4,801.60 total .
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How Do I Determine My Va Disability Compensation
To determine your disability compensation, you need to file a claim with VA. The VA rates your disability by severity after reviewing every piece of evidence in your claim.
You may only receive compensation for a single diagnostic code per condition, even if that condition satisfies more than one diagnostic code. However, those with more than one condition may receive additional compensation based on the combined rating system.
You may receive additional compensation if:
- You have very severe disabilities or loss of limb
- you have a spouse, children, or dependent parents
- you have a seriously disabled spouse
Note: If you have more than one child or your spouse receives Aid and Attendance benefits , be sure to include the figures from the “Add” row.
Did you know: Veterans can use their disability income in conjunction with their VA loan benefits. Speak with a home loan specialist to see how much you can afford.
What Kinds Of Retirement Benefits Do Us Army Soldiers Receive
After serving in the U.S. Army, soldiers receive retirement pay. The retirement allowance that a soldier receives is determined by the number of years served and the rank upon retirement. The U.S. Army structures its retirement pay much like a 401, which allows retired veterans to purchase a home, make investments and deposit savings. The Thrift Savings Plan is another option backed by the government and offered to retirees as another means of contributing to their retirement savings.
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Contribute To Your Thrift Savings Plan
The TSP is a plan for military retirees. It is offered to everyone who retired under the BRS retirement plan. It is a savings and investment plan that the federal government provides. It is like a 401, and people can save money. They get tax benefits like other companies who have 401s.
Initially, the TSP was only for federal civilian employees. Then, starting on October 9, 2001, people who are thinking about joining the Army, Navy, Air Force, Marines, or Coast Guard were also allowed to participate in the TSP.
The TSP is for people who save for retirement. You cant get the money out again until you retire. The amount of income you will get from your savings in a TSP account depends on how much money you put in during your working years and how well it has grown.
The money you place in your TSP is always yours. The Department of Defense will not keep the money that you contribute after you have served for two years.
How Much Does The Military Pay Salary Requirements And Job Description
A career in the U.S. Army has a lot to offer. If you have a vocation you want to pursue, the Army probably has a training program for it, and you don’t have to pay for it. When you complete the training courses, you will have a job for life, with no chance of ever becoming laid off.
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Military Retirement Annual Tax Liability
However, your monthly withholding is not accurate. It only gives an idea of what you might owe. How much you pay in taxes depends on how much money you make outside of your military pension. It also depends on if you are supporting children and what deductions or credits for which you may be entitled to. When you do your yearly tax return, you are actually calculating how much money the government owes you for the taxes that they have already taken. You also need to know if there is more money coming to pay what they owe.
After you retire, it will be difficult at first. You might find yourself in a different tax situation than what you are used to now. If you do not feel secure doing this yourself, talk to a professional. They can help you figure out the best way to deal with your taxes. However, if you do this yourself, just remember that you might need to go back and do it again.
Military Pay And Allowances: What Is Considered Not Taxable By The Irs
One of the first hurdles you will need to overcome when trying to understand how military pay and allowances are taxed by the federal government is how military pay differs from military allowances, and how these things differ from things like hazardous duty pay, reenlistment bonuses, or tuition benefits.
A good general rule of thumb to start off with is that all military pay is subject to federal income tax. Most military allowances are not subject to federal taxation, but there are exceptions . So a service members basic pay will be taxed, but not the housing allowance, separate rations allowance or BAS , clothing allowance, etc.
A Military Allowance That Is Subject To Federal Income Tax
The military allowance known as COLA, the Cost Of Living Allowance, is an example of a military allowance that is subject to tax under specific circumstances. Stateside COLA is taxable, but the overseas version is NOT TAXABLE at the time of this writing. Overseas COLA is known by several names including OCONUS COLA and receiving this overseas version of the Cost of Living Allowance will not affect your tax position.
Some Tax Breaks Are Affected By Non-Taxable Military Allowances
Military Retirement Income: Confusion At Tax Time
That said, the VA official site reminds, Disability benefits received from the VA should not be included in your gross income. What does the IRS consider to be a disability benefit?
The Combat-Injured Veterans Tax Fairness Act of 2016
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Q& a: What Makes Up A Us Army Salary
The U.S. Army establishes many different incentives and structures its basic pay to provide its service members with a secure income including additional perks. Living allowances, educational benefits and exceptional retirement pay are all salary benefits the U.S. Army pays its service members.
In this article, we explore what the salary for the U.S. Army is, the elements that make up a U.S. Army salary and several frequently asked questions to help you determine if this is the right career path for you.
Basic Pay And Allowances
While serving in the military, your basic pay is considered taxable income, while many allowances are not. That means taxes will be deducted from your basic pay, but not from additional allowances aimed at paying for things like housing or food.
Basic Pay is the primary compensation for service members and is determined by assessing two factors: pay grade and years in service. As mentioned above, basic pay is your primary taxable income. Its calculated monthly, then cut it half and distributed in two paychecks. Basic Pay can be compared to a salary in a civilian job, meaning its not tied specifically to hours, as service members are not eligible for overtime. Basic Pay rate are adjusted annually to coincide with the national Employment Cost Index. In other words, Basic Pay increases each year to coincide with changes in average private sector pay and inflation.
If youd like to know what you should be receiving for your basic military pay, check out our 2020 military pay charts for officers and enlisted personnel here.
Basic Allowance for Housing
Service members also sometimes receive something called BAH Type II, which is an in-transit rate for housing between duty stations.
Want to find out what the exact BAH rate is for your appointed place of duty? Check out this BAH Calculator provided by the Defense Travel Management Office.
Basic Allowance for Subsistence
Service members received a .90% increase in BAS for 2020.
Other Common Allowances
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Electronic Access To Pay Information
MyPay, a web-based service of DFAS, provides up-to-date, round-the-clock pay information for military service members, DoD civilian employees, military retirees and annuitants. Accessed through a personal identification number, the MyPay site also may be used to make address changes, review W-2 forms, or adjust contributions to the military Thrift Savings Program.
Because the service members Leave and Earnings Statement can be viewed through this secure site, many military families find MyPay especially useful during deployments. Service members often provide their PIN information to the spouse who then can access the LES through MyPay. Spouses find they are better able to help manage the familys finances while the service member is away.
What Affects Military Pay
As an active duty member of the military, the primary component of your salary is based on your basic pay, which is impacted by your rank and years of service. Moving past this, there are also differences in pay based on whether you are on active duty or in the reserves. Here’s a closer look at these distinctions and how much money you can make in the military based on these variables. For the most up-to-date information, please follow the links above.
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Am I Eligible For Va Disability Compensation
Veterans with a service-connected physical or mental disability that makes everyday tasks difficult or impossible may be eligible for VA disability benefits.
Eligibility to file a VA disability claim is dependent on meeting one of the following conditions as set by the VA:
- A Veteran who became sick or injured while serving in the military, or
- A Veteran with an illness or injury before enlisting that was worsened by service, or
- A Veteran with a service-connected disability that didn’t appear until after separating from the military
The VA will need evidence to support your disability claim when applying, which we discuss in the next section.
How Much Does The Military Pay
The best way to figure out how much the military pays is to use the military pay calculator or check military pay charts. If you’re not yet in the service, start by looking at E-1, the amount you’ll be paid during Basic Training.
How much you get paid over time will change based on your rank, location, job and more.
Related: Learn more about military ranks
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Commissary And The Exchange
This category is very dependent on how much each family uses the Commissary and Exchange. The 2016 PSMC lists out that the average Commissary benefit is about $4,430 a year for a family of four with most people saving about 30% of their grocery purchases. More recent statistics as reported by Stars and Stripes show that figure to be about 24% on average now though and can vary widely between assignment locations. In our particular case, we live off base pretty far from the Commissary and Exchange and can get very good deals through Costco, our local coop, community supported agriculture, buying meat directly from ranchers, and deal hunting online so I dont calculate anything from this benefit. Take into your purchasing habits to fully analyze this one for you.
- Formula: = Average Benefit
- Note: To get a more accurate estimate, the Stars and Stripes articlebreaks out the average savings by region and can range from around 19% to over 44% for OCONUS.
How To Determine Your Monthly Va Disability Payment
To determine your monthly disability payment, navigate to the table below that fits your disability rating, marital and dependent status. Once you’re on the correct table, follow your rating across to your specific marital and dependent status.
If you have additional children or a spouse receiving Aid and Attendance benefits, you should include these figures from the added amounts table.
Jump directly to the tables here:
You may qualify for more depending on if your spouse receives Aid and Attendance benefits and the number of children you have. View the added amounts table here and how to calculate.
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Class A And Class B Reserve Service
Pay rates for Reservists on Class A and Class B service are listed below by rank, within each occupation group. These are daily pay rates and they are the latest rates available as of 1 April 2019 unless stated otherwise.
Within each rank there are a number of pay increments which represent automatic annual increases in pay to recognize advancements in experience, skill and knowledge. Some ranks have several pay levels based on entry plans to the Canadian Armed Forces. See pay overview for information on the factors that determine pay rates.
Glossary Of Military Pay Calculator Terms
Basic Allowance for Houseing : A housing allowance for servicemembers in local civilian housing markets within the United States when government quarters are not provided. BAH is determined by geographic duty location, pay grade, and dependency status.
Basic Allowance for Subsistence : BAS offsets the cost of a servicemembers meal. Enlisted members get full BAS but pay for all meals including those provided by the government.
Base Pay : Basic pay is determined by rank and length of service. Basic pay is taxable, unlike allowances and makes up the largest portion of compensation.
Branch of Service: The United States Armed Forces has 5 branches of service: Army, Navy, Air Force, Marines Corps, and Coast Guard.
Duty Station Zip Code: BAH is based on the duty station zip code.
Paygrade: A system of letters and numbers to classify servicemembers pay.
- E = Enlisted Member
- W = Warrant Officer
- O = Commissioned Officer
- The number indicates the level of pay for each letter where 1 is the beginning level of pay
Payscale Year: Military compensation typically increases each year. See current, present and future compensation by selecting different payscale years.
Regular Military Compensation : The sum of base pay, BAH, BAS, and the federal income tax advantage from tax-free allowances. Regular military compensation is the approximate amount of an equivalent civilian salary. RMC does not include all compensation .
Years of Service: The numbers of years a servicemember has served.
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