Get to know COLA

The Overseas Cost of Living Allowance, or COLA, is a non-taxable supplemental pay allowance designed to offset overseas prices so that Service members can afford to purchase the same level of goods and services overseas as they could if they were stationed in the United States. COLA is impacted by prices in the U.S. and exchange rates. Because COLA fluctuates, it shouldn't be hardwired into a household budget. Learn more about COLA by reviewing the COLA toolkit available on the DTMO website. The toolkit contains several videos and communication products that explain the key elements of the allowance, as well as a link to a calculator that computes COLA payments at any given time.

Often, compensation and allowance issues are difficult to understand. Overseas Cost of Living Allowance (COLA) is one such allowance, not only because it fluctuates, but also because it is often misperceived as means for maintaining a certain quality of life while stationed overseas. To help clarify, DTMO recently launched a communications campaign designed to increase awareness and understanding of Overseas COLA and provide commanders and trainers with a toolkit to use when communicating about Overseas COLA.

Overseas COLA is a non-taxable, supplemental allowance designed to offset the higher overseas prices of non-housing goods and services so that Service members living overseas can afford to purchase the same level of goods and services as their counterparts stationed in CONUS. It is not only based on a comparison of the prices of goods and services overseas and those on average in CONUS, but varies for each military member from location to location. This is due to the differences in the shopping amenities available, amount of purchases made on-base versus off-base, and local prices.

Relying on COLA can have a financial impact on service members. It can fluctuate from paycheck to paycheck. The actual COLA payment is based on rank, years of service and number of dependents. It is also adjusted for the current exchange rate on the day in which it is paid.

Service members can learn more about COLA by reviewing the COLA toolkit on the DTMO website. The toolkit contains several videos and communication products that explain the key elements of the allowance, as well as a link to a calculator that computes COLA payments at any given time.