Cost of Living Allowance (U.S. Military) - How IT Works

How It Works

The fundamental goal of COLA is to compensate servicemembers for the high cost of living at certain duty stations. COLA rates are based on a servicemember's pay grade, years of service, and number of dependents.

An area is considered high cost if the cost of living for that area exceeds 108% of that national average of non-housing costs. COLA takes into account the availability of commissary, exchange, and hospital facilities at a specific duty station, because servicemembers without this infrastructure tend to have a higher cost of living. However, not having this infrastructure is not enough in an of itself to qualify an area for COLA. COLA also factors in local taxes, including taxes on such things as Privately Owned Vehicles for a specific duty location in calculating the cost of living in a particular area.

You will only receive COLA, whether you are stationed in the United States or abroad, if you are assigned to an area where the cost of living is higher than it would be in an average area in the United States. If the cost of living at your duty station is the same as or lower than the average in the US, you will not receive any COLA.

COLA rates vary from station to station, even within a specific country.