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Military Tax-Exempt Allowances

Military tax-exempt allowances include the Basic Allowance for Subsistence (BAS) and the Basic Allowance for Housing (BAH). Both of these allowances are based upon the military historically paying for a service member’s room and board. All allowances created after 1986 are taxable including CONUS COLA.

BAS is an allowance that compensates for a service member’s food. As of 2002 BAS is extended to all soldiers including those living on base because the tax-exempt status of the allowance adds up considerably over time. This allowance increases every year according to the USDA food cost index. BAS for 2011 is $325.04 for enlisted personnel and $223.84 for officers.

BAH allowance is given to military who do not live in government housing. The allowance is based on pay grade, geographic location and the number of dependents. Sometimes you can get a BAH allowance if you are living separately from your family. If you or your dependents are living overseas you may be entitled to an Overseas Housing Allowance (OHA) instead of BAH. All full-time military personnel are entitled to a partial BAH allowance.

BAH II allowances are for special circumstances like military members in transit and reservists who are on active duty less than 30 days. BAH-Diff is an allowance set up to compensate any service member who pays child support as long as the child support paid is higher than the BAH-Diff rate. Both BAH II and BAH-Diff are published separately from BAH rates.

BAS and BAH generally add up to a substantial amount of money over the course of an entire year. These amounts are excluded from tax and therefore should be calculated into the salary gap that often exists between military jobs and those in the private sector. Military pay is often lower but allowances and other military benefits — especially in high cost regions of the country — substantially help to level the playing field.

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