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Year of the Jackpot
Pay & Allowances Rise in 2002
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Year of the Jackpot 
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• Pay Charts
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• Defense Appropriations Act


Congress and the President have been good to military personnel this year. On December 28th, 2001, President Bush signed into law the FY2002 Defense Appropriations Bill. In addition to the largest increase in basic pay in 20 years, and the largest increase to housing allowances in 10 years, there have been several increases and improvements in military pay and compensation.

Base Pay

Effective January 1, 2002, all active duty, guard, and reserve members will see the largest increase in base pay in the last 20 years. The raise, which averages 6.8 percent, is "targeted," ranging from 5 percent to a maximum of 15 percent. The raise is significantly higher than the inflation rate (2.9 percent for last year), and ahead of the average wage increases for the private sector (4.1 percent). Most of the increase this year is targeted toward mid-grade and senior-grade noncommissioned officers and petty officers, as well as mid-grade commissioned officers. Including the special midyear increase given in July of 2000 and 2001, this is the fourth consecutive time that pay increases have been targeted to specific pay grades. Another change is for Reserve officers with prior enlisted experience. Previously, unlike active duty officers with prior enlisted experience, Reserve officers did not have additional "OE" categories in the pay charts. Under the new law, Reserve officers with more than four years enlisted time are treated like active duty officers. (See new base pay charts)

Housing Allowance

(See new BAH charts) Also effective the first day of January, basic allowance for housing (BAH) increases an average of 10 percent across the board. This is the second consecutive year that housing allowances have risen significantly, as part of a five-year plan to reduce average out-of-pocket housing expenses to zero by the year 2005. In 2000, average out-of-pocket costs were 20 percent, reduced to 15 percent with the raise for 2001. The 2002 raise brings average out-of-pocket housing expenses to 11.3 percent. Housing allowance rates are based upon rank, location, and whether or not a member has dependents. Below are some selected examples of costs used to determine rates for members with dependents:


Rank Reimbursement Criteria Average monthly BAH for 2002
E-5 Average cost of a two-bedroom townhouse or duplex $822
E-6 Average cost of a three-bedroom townhouse or duplex $933
E-7 Average cost for a three-bedroom townhouse plus 36 percent of the cost difference between a townhouse and three-bedroom home $990
E-8 Average cost for a three-bedroom townhouse plus 75 percent of the cost difference between a townhouse and a three-bedroom home $1063
E-9 Average cost of a three-bedroom home, plus 16 percent of the cost difference between a three-bedroom and four-bedroom home $1178
W-3 Average cost of a three-bedroom single-family home $1042
O-5 Average cost of a four-bedroom single-family home $1549

Food Allowance

(See new BAS Chart). There are several significant changes to how Basic Allowance for Sustenance (BAS) is managed for 2002:

(1) First and foremost, under previous law, BAS was paid only when individuals were officially allowed (for various reasons) to eat their meals outside of the military dining facilities (chow halls). Those required to eat meals in the dining facilities (usually, single enlisted, living on-base) received a "partial allowance" of about $25.80 per month. Under new procedures, all enlisted and officers receive full-rate BAS, after initial entry training (boot camp and follow-on schooling). However, for those required to consume meals in the dining facilities, most of the BAS will be automatically deducted from their paychecks, resulting in those members still only receiving about $26.00 each month. There are plans (for the future) to only deduct the cost of meals actually consumed in the dining facilities, but that is likely several years in the future (for the present time, DOD depends on the fact that members required to consume meals in the dining facilities only eat an average of 70 percent of their meals there, and purchase 30 percent of the meals elsewhere. The services rely upon the difference to help balance their food budgets).

(2) Enlisted members with less than 4 months of service used to be paid BAS at a lower rate. The new law eliminates this difference.

(3) Since 1998, BAS annual increases have been limited, by law, to one percent. This year's law eliminates that provision and ties BAS annual increases to the inflation rate as measured by the Agriculture Department's Food Cost Index (which, for 2002 is 3.71 percent).

(4) Under the previous system, there was a little-used category known as "Emergency Conditions Where No Government Dining Facilities Exist." This category has been eliminated

(5) Also eliminated by the new law is the "Rations in Kind Not Available." This rate is payable when a member's duty or location prevents access to government dining facilities. In 2001, it paid about $30.00 per month more than the normal rate. However, DOD has elected to temporarily continue this category, but will not allow its rate to increase. When the rate of "normal" BAS exceeds the rate currently allowed under the "Rations in Kind Not Available" category (probably about two years from now), it will be permanently eliminated.

(6) BAS used to be calculated on a daily basis. That means that a person who received BAS got just a little bit more during months that had 31 days in them, and a little bit less during the month of February (which has less than 30 days). Under the new procedures, BAS is a monthly set rate.

Combat (Danger) Pay

The President signed the Executive Order for Danger Pay for the Afghanistan region in November. The order did not contain any provisions for back-pay, so members who were deployed to the region during September and October did not receive danger pay of $150 per month. The new law makes danger pay for the Afghanistan region retroactive to 19 September, which is the date that the earliest U.S. Forces deployed to the region.

Enlistment/Reenlistment Bonuses

(See Bonus Charts) As in previous years, Congress has continued the authority for the services to pay enlistment and reenlistment bonuses for both active duty and reserve forces. Congress traditionally only grants this authority for one year at a time. The previous authority ran out on December 31, 2001. The new provision extends the authority to December 31, 2002.

Another change to the law allows the services to pay bonuses to people in critical skills who volunteer to serve in the non-drilling Ready Reserve. Whether or not the services will implement this program is unknown.

Officer Accession Bonuses

This is a new program aimed at attracting new officers for critical officer-skills. The law allows the services to offer up to $60,000 to attract commissioned officers for critical skills. There is no information currently available as to whether or not the services will elect to use this new option, and, if so, to what extent they will use it.

G.I. Bill Changes

The new law makes several changes to the Montgomery G.I. Bill.

First, rates are programmed to increase in three phases. For individuals who enlist for a period of at least three years, rates increase from $672 per month to $800 per month on January 1, 2002, then to $900 per month on October 1, 2002, and to $985 per month on October 1, 2003. For those who enlist for less than three years of service, rates increase to $650 per month on January 1, 2002; to $650 per month on October 1, 2002; and $800 per month on October 1, 2003.

The new law allows members serving in critical specialties to transfer some of the Montgomery G.I. Bill benefits to their dependents. Under the law, the services are allowed to let members with more than six years of service transfer up to one-half of their benefits to their spouse, in exchange for an additional active duty service commitment of six years. Members with more than 10 years of service could transfer up to one-half of their benefits to their child(ren) by agreeing to serve for an additional six years. While authorized under the law, there is no indication as to whether or not, or to what extent, the services will implement this option.

Finally, beginning October 1, members can combine their monthly G.I. Bill benefits into a single payment to cover up to 60 percent of the total cost of an entire education program, leading to a high tech job. For example, under the old system, a two-month high-tech course in data management could only be reimbursed using two month's worth of G.I. Bill benefits ($672 per month), even though the course might cost several thousands of dollars. Under the new plan, 60 percent of the entire cost could be reimbursed.

There are no rate increases for Guard/Reserve G.I. Bill benefits, however, backdated to September 11, 2001, Reservists who were using their benefits and had to drop courses because of being called to active duty, will get additional benefits to cover those courses. Additionally, the 10-year time-limit for Reservists to use benefits is extended by the period spent on active duty, plus four months.

Savings Bond Plan

The new law authorizes the services to use U.S. Savings Bonds as reenlistment bonuses. To be eligible, members would have had to complete their initial term of service, then, members with three or fewer years of service could receive Savings Bonds valued at $5,000. Those with three to nine years could receive $15,000, and those with nine or more years could get up to $30,000. Military officials have already indicated they probably would not implement this new option, as they feel it simply duplicates the current enlistment/reenlistment bonus program.

Officer Uniform Allowance

Last year, Congress doubled the official initial uniform allowance from $200 to $400, but forgot to include provisions for officers who entered the service after October 1, 2000, but before the law was implemented, to receive the extra $200. The new law allows for officers who entered active duty on or after 1 October 2000, but only received the $200 allowance, to receive the remaining $200.

Special Pays for Troops Under Stop-Loss

"Stop-Loss" is a program that allows the services to involuntarily extend the enlistment of members during times of emergency, war, or increased deployment actions. Many times, individuals affected by Stop-Loss lose some special and incentive pays at the end of their current enlistment. Under the new law, services must continue to pay special and incentive pays that the member was entitled to. This is retroactive to September 11th, so servicemembers currently under Stop-Loss, who received a pay-cut can apply for reimbursement.

Aviation/Surface Warfare Officer Early Bonus Program

This is a special test program, to be conducted by the Navy. If it works out, it may be adopted by the other services. Under this program, Aviators and Surface Warfare Officers can sign up for continued service up to one year before the end of their current obligation, and begin receiving their continuation bonuses. This doesn't result in any extra money, but does allow them to receive the money earlier.

Submarine Duty Pay

The new law allows the Navy to increase submarine pay to $1,000 per month. Whether or not the Navy will take advantage of this authority is up to the Secretary of the Navy.

Installments for Redux Bonus

Under current law, at the 15-year-point of their career, members must decide whether to accept a cash bonus of $30,000 with reduced retirement benefits, or receive full retirement benefits, with no cash bonus (See Understanding Military Retirement). The new law allows those who accept the bonus to elect to accept them in installments, thereby reducing their tax liabilities, and allowing the members to deposit the money in the new Thrift Savings Plan, which has an annual maximum.

Dislocation Allowance

Under previous law, members were not allowed to receive a dislocation allowance for their first Permanent Change of Station (PCS) assignment. This has now changed, and all members are authorized a dislocation allowance for first, and subsequent PCS moves.

Additionally, families who are forced to move because their base housing is being renovated or privatized may now receive a partial dislocation allowance of $500.

Finally, military-married-to-military couples previously could not receive a dislocation allowance unless they had dependents. This has now changed, and dual-service couples now receive the full allowance for PCS moves.

Household Goods Weight Allowance

Beginning on January 1, 2003, the weight allowance for shipping household goods increase for junior enlisted:


Category New Rate
E-4 and Below (With Dependents) 8,000 lbs
E-4 (Single) 7,000 lbs
E-3 and Below (Single) 5,000 lbs

Temporary Housing Allowance for Junior Enlisted

Beginning January 1, 2003, E-4s (with less than two years of service) and E-3s and below with family members are allowed to receive a temporary housing allowance during PCS moves. Currently, this entitlement is limited to E-4s and above with more than two years of service. The rates vary by location.

Increased PCS Per Diem

Since 1981, Per Diem paid to military members and dependents making a PCS move by automobile has been limited to $50.00 per day (one day's travel equals 350 miles). Federal civilians receive $82.00 per day. Under the new law, effective January 1, 2003, military members must receive the same (or more) per diem as Federal Civilian Employees.

Family Separation Allowance

Under the old law, individuals who elected (voluntarily) not to be accompanied by dependents during an assignment, were not entitled to family separation allowance. The new law allows family separation allowance when the member decides not to relocate a family member because of certifiable medical problems.

Pet Quarantine Reimbursement

Rates are doubled, from $225 to $550.

Private Vehicle Transportation/Storage

Previously, the military would only ship vehicles to/from overseas locations for PCS moves. The new law allows the military to ship privately owned vehicles to CONUS bases during PCS moves, as long as the cost of the shipment would not exceed the mileage allowance that would have been paid to the member to drive the vehicle.

Additionally, individuals who elect to store their vehicles at commercial storage facilities, rather than ship them overseas, can now be reimbursed storage costs in advance.

Travel During Consecutive Overseas Tours (COT)

Under the old law, members were allowed a free trip back to their home-of-record in the states when accepting a Consecutive Overseas Tour. The new law allows members to take that trip to locations other than their home-of-record, anywhere in the World, as long as the cost does not exceed what it would have cost to travel to their home-of-record location.

Frequent Flyer Benefits

Under the old law, members and dependents who received promotional benefits during official government travel had to turn those benefits over to the government. Under the new provisions, members and dependents can keep promotional considerations, such as frequent flyer miles, upgrades, etc. The new law includes provisions so that members can use such benefits earned in the past, not just benefits earned after implementation of the new law.

VA Home Loans for Reservists.

The current authority for Reservists to use the VA Home Loan program runs out September 30, 2007. The new law extends the authority for two years, to September 30, 2009.

Sale of Leave by Reservists

Reservists who are called to active duty for more than 30 days, but less than one year by sell their unused leave if they have accumulated more than 60 days. Previously, only reservists called for contingency operations could do this.

Commissary Benefits

Reservists no longer have to complete a year of service before being authorized to use the commissary. Benefits now begin immediately, but remain limited to no more than 24 days per year.



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