Military Pilot Pay and Benefits

The military offers some fantastic career opportunities for pilots. It can also set you up for an enjoyable and lucrative civilian flying career later in life. One of the important parts of deciding whether to join the military or not is to understand the pay and benefits it offers. We’ll cover that here today.

Before we get going, I want to mention that military pay is public data. We’re going to look at pay using the 2019 pay tables on the Defense Finance and Accounting Service (DFAS) website. Most civilian employers negotiate pay with new employees, after hiring them for the job. Most companies make individual salaries a big secret. Women frequently get paid less than men for the same job, in large part because of these secrecy games. (To be fair though, Google recently paid some money to male employees after finding that they’d been underpaid when compared with their female peers.) Thankfully, the military avoids this stupidity. When you look at someone’s uniform, you immediately know his or her name, what he or she does, and how much money he or she gets paid every year. There’s a lot to be said about the value of transparency when it comes to making career decisions and instilling a good work ethic.

Table of Contents

1. Military Pilot Pay and Allowances
2. Military Pilot Pay Examples
3. Taxes on Military Pilot Pay
4. Military Pilot Benefits
5. Summary

Military Pilot Pay and Allowances

Base Pay

The fundamental part of your check every month is your base pay, which is calculated by using your rank and the number of years you’ve been in service. Although poor performance can prevent promotions, you stand a very good chance of getting promoted on a regular timeline throughout your career.

The lowest pay grade for commissioned military officers is O-1. The Navy and Coast Guard call the associated rank Ensign, while all the other branches call it Second Lieutenant. In 2019, a brand-new O-1 (with less than 4 years of prior enlisted service, if applicable) makes $3,188.40 per month. At a full 20 years of service, this nearly triples to $9,243.60 per month for an O-5, Lieutenant Colonel (or Commander in the Navy/Coast Guard). 

Flight Pay

Aircrew members also receive flight pay, also known as Aviation Career Incentive Pay (ACIP). This starts out at a miserly $150 per month but increases to $1,000 at the height of your flying career. Although the idea is that you should only receive flight pay during months that you perform flight duty, there are some allowances for pilots in non-flying assignments to continue receiving flight pay. The explanation of those rules gets a little involved, so we’ll save it for another time.

These two types of pay are nice, but they’re not the only money you’ll see in your paycheck. You also get allowances.

BAS and BAH

The government gives military members a Basic Allowance for Sustenance (BAS) and a Basic Allowance for Housing (BAH). These are (awesome) parts of your overall compensation as a military member. Since they’re “allowances” rather than pay, you don’t have to pay any taxes on them. You get to keep the full amount of your allowances, whether you spend that amount each month or not.

BAS amount is the same for all officers, regardless of rank or time in service. It is intended to pay for meals, but at $254.39 per month (as of 2019), it probably won’t cover all your needs.

BAH is intended to cover the average housing cost in the area where you’re assigned. The value depends on your zip code, your pay grade, and whether you have dependents living with you (take note that the “with dependents” rate does not increase based on the number of dependents you have). You can find values for a specific set of criteria on the Defense Travel Management Office website. It’s certainly possible to find housing for considerably cheaper than your BAH allowance, which is a nice way to make a bit of extra money. However, if you choose to live in base housing, you will automatically net $0 and this will not be an option.

Retirement Funds

We’ll cover military retirement funds in great detail in an upcoming BogiDope article, but an important thing to know is that the US Government will match your contributions to a retirement account, called a Thrift Savings Plan (TSP), up to 5% of your base pay each month. (There are a lot of caveats and fine print associated with this 5%. The Military Money Manual is a great place to get information on the specifics.) The TSP is essentially the military’s version of a civilian 401(k) plan. Only a great fool would voluntarily forego this benefit. You’re reading BogiDope, so we’re going to assume you’re not a great fool. We highly recommend that you contribute at least enough to get the government’s 5% match every month. If you don’t do that, you’re leaving free money (with compounding interest) on the table which could greatly benefit you once you retire.

Retention Bonuses

Later in your career, the military may try to throw a bunch of money your way to entice you to stick around. If you plan to stay anyway, this is a great deal. If you’re not sure whether you want to stay, it’s a trap. Right now the Air Force offers bonuses of up to $35,000 per year, and they may pay half of your total bonus up front, depending on what you fly.

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Military Pilot Pay Examples

So, what does all this look like? Let’s calculate the monthly pay for a brand-new O-1 attending pilot training at Laughlin AFB, TX in 2019. Chances are you’ll live in an on-base dormitory for this year and not receive BAH, but we’ll consider the possibility of living off-base just to make comparisons easier. We’ll assume you’re single for now. We’ll also assume that you’re wise and are contributing 5% of your base pay to your TSP so that you can receive the government’s match (and we’ll count that match as income — because it is, even if you can’t withdraw it yet). Here’s what we get:

USAF Second Lieutenant Pilot Income Example

That’s not half bad for your first year out of college as a pilot with fewer than 100 flight hours to your name.

Let’s see how your income can grow by looking at what an O-5 with 20 years of service makes. We’ll assume he or she is making maximum flight pay, receives a $35,000 per year retention bonus, is married, and lives at Eglin AFB, FL.

USAF Lieutenant Colonel Pilot Income Example

As with everything, this career comes with unique costs. A short list includes long work hours, frequent moves, and multi-month deployments. However, serving a higher purpose and doing a mission you love can make it all worth it. We see that a military career can pay very well. Not only does this O-5 make great money, but he or she is also now eligible to collect a pension check, every month, for the rest of his or her life. Under the new Blended Retirement System (BRS) that check will be equal to 40% of his or her base pay, or $3,697.44, every month for life.

Air National Guard/Air Force Reserve Pilot Pay Example

The previous figures are based on pay for a full-time Active Duty officer. Pay in the National Guard and Reserve components works somewhat differently. We’ll cover this is more detail in a future article, but here are the basics:

• If you are on 30 days or more of continuous military orders, your pay and benefits will be exactly the same as they would be on active duty.
• If you are a part-time Air National Guard (ANG) or Air Force Reserve (AFRES) pilot you will be paid for each individual day you show up to work.
• There are several different types of orders with unique benefits, but as a basic formula to determine how much each day is worth, add your base pay and flight pay together and divide that number by 30 (days in the month). That amount is considered one period (1/2 day of work). Unless you’re intentionally only working half a day, you will be paid for two periods each time you work at the squadron.

For example, using the 2019 pay charts, an O-4 with over 12 years of military service and over six years of aviation service has a base pay of $7,596 and $800 of flight pay per month. $7,596 + $800 = $8,396/30 days = $280 per period. Typically, you’ll work a full day (i.e. two periods), so $280 x 2 = $560 per day. If you average 3-6 days in the squadron per month, your annual Guard salary will be between $20,000 and $40,000 without including any TDYs (business trips) or deployments.

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Taxes on Military Pilot Pay

Before we leave the topic of pay we need to look at a related subject: taxes. If you’re a single officer making nearly $54,000 per year, some smart saving decisions can lead to you having a tax bill of almost $0!

Since your BAS and BAH are untaxed allowances, your first-year taxable pay is only $40,060.80. The latest changes to tax law increased the standard deduction for income taxes to $18,350 for an individual and $24,400 for a married couple filing jointly. When calculating your tax bill, you just subtract this amount from your $40,060.80 to reach a value of $21,710.80. If you left things like this, you’d pay a few thousand dollars in taxes, but I’m hoping you’re smarter.

Although there are exceptions, most people going into military pilot training don’t have many dependents or a lot of debt (other than perhaps student loans). Couple that with the fact that pilot training is extremely intensive and requires a great deal of your time, and it’s obvious that you don’t need to spend much money during this year. Sure, you need to enjoy life and get a break from studying occasionally, but you’d be a fool to go buy an expensive car or a bunch of other toys.

If you’re smart, you’ll invest as much money into your TSP as the IRS allows. That limit is currently $19,000 per year. If you’re a young officer, I generally advocate putting those funds into your Roth TSP (post-tax contributions) so that you don’t have to pay taxes on your earnings when you withdraw funds for retirement. But you could instead potentially put those funds into your traditional TSP to almost annihilate your tax bill. Since your traditional TSP contributions are tax-deferred, you get to subtract them from your taxable income. If you contribute the full IRS limit of $19,000 per year, then your taxable income decreases from the $21,710.80 we just calculated earlier to a mere $2,710.80. That income is so small that it all falls within the 10% tax bracket, meaning you’ll only pay $271 in taxes that year, assuming you don’t get any other deductions. When compared to the nearly $53,990.52 you took in this year (accounting for allowances), you’re looking at an effective tax rate of 0.5%. That’s pretty amazing, especially when it means that even after contributing $19,000 to your TSP you get to spend up to $34,719.44 that year. If you’re more of a visual person, here’s the chart summarizing this:

Thrift Savings Plan Contributions Effect on Tax Rate

Unfortunately, our progressive tax system diminishes this effect as you increase in rank, but you can really smash your tax bill and maximize your savings early in your career.

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Military Pilot Benefits

If all you got out of military service was the pay we just discussed, it’d be a pretty great deal. However, there are many other benefits associated with military service. It would span multiple articles to discuss all of the additional benefits of military service, but here’s a list of what I consider to be some of the top ones:

Healthcare

Officers on Active Duty in the US military (and their families) get essentially unlimited free healthcare through a company called Tricare. If you’ve paid any attention to the news over the past decade, you should realize that this is a huge deal. The costs of healthcare have skyrocketed and can be enough to break some families. My airline offers private health insurance and quotes a maximum out-of-pocket cost in the event of a really terrible year where you have to pay every deductible, coinsurance, copay, etc. For the premium plan, this maximum out-of-pocket cost is $15,600.

I hope you never have a year bad enough to need that much medical care. Thankfully, it hasn’t cost my family nearly this much. I have a Bronze HSA plan with premiums of less than $100 per month. Our deductibles, copays, etc. could potentially get close to that $15,600 figure, but in three years of airline work my family hasn’t paid more than $3,000 in annual deductibles so far.

I feel like it’s fair to equate military healthcare to a dollar value as high as that $15,600 per year when trying to come up with a figure for total annual compensation. In reality, it won’t be nearly as valuable to a healthy family in most years, so you might use a smaller figure.

Paid Vacation Time

At many companies, you’re lucky to get two weeks of paid vacation per year. In most cases, you start out with a vacation balance of zero and have to “earn” your vacation days over time. The military is a much better deal: everyone gets 30 days of paid leave per year, regardless of rank or time in service. Technically, you do accrue this balance at the rate of 2.5 days of leave earned per month. However, many military members find they have a hard time using all of their earned leave.

Education Benefits

This one is tough to write about succinctly because each branch of service has its own programs. The main idea, though, is that the military will pay for you to continue your education while you’re on active duty. In the Air Force this benefit is called Tuition Assistance, or TA. They’ll pay for up to $4,500 per year, and a total benefit of $9,000, toward a higher degree an/or many certification programs. You incur a 2-year commitment every time you start a new class, but if you owe more than two years anyway, this commitment doesn’t hurt you. I used this program to earn a master’s degree for a very minimal out-of-pocket cost. I got it done in two years of nights and weekends, including free time while I was deployed.

Military.com maintains a great listing of the educational programs offered by each military branch.

While you can get money toward advanced academic degrees, there are also resources available for other types of education. Most military bases have libraries and education offices that can provide free language courses, IT certifications, and other good deals. A hard-working individual could obtain many thousands of dollars in valuable education benefits, in his or her free time, while serving in the military.

Post-9/11 G.I. Bill

Although it’s another education program, the Post-9/11 G.I. Bill is such a momentous benefit that it deserves its own discussion. Instituted by President George W. Bush, this program covers all tuition and fees for four years of college (36 calendar months) of education at any state school, as well as $1,000 per year for books. If you’re not on active duty while you’re in school, you also receive the BAH equivalent to what an E-5 with dependents would earn living in your area. The G.I. Bill will also cover costs for attending a private college, but in this case the total covered costs are capped. Go to the official G.I. Bill website for all the details.

You don’t have to use this benefit for college either. The G.I. Bill can go toward covering the costs of flight training, vocational training, or a variety of other programs.

The G.I. Bill is a fantastic deal, and it gets even better: you can transfer your unused G.I. Bill benefits to your spouse or children (including combinations of spouse, child, and/or children). However, you need to serve for a minimum amount of time to earn the full benefit (typically 6 years), and then you’ll owe an additional 4 years service, so do it as soon as you’re eligible. If you’re planning on getting out of the military sooner than that, do not transfer your G.I. Bill benefits.

VA Loans

Although we’ve demonstrated that military pilots get paid pretty well, it’s still a tall order to save up enough money for a down payment on a home. Some banks will offer you a loan with less money down, but charge you Private Mortgage Insurance (PMI) for the favor. PMI sucks — it’s money you pay and never get back.

Thankfully, the Veterans Administration (VA) has a home loan program that will guarantee a loan for you with little or no money down. You pay a “funding fee” instead, but it’s usually a pretty good option. If you end up with a disability rating after you leave the military (and you probably will), they’ll even waive that funding fee.

My wife and I bought houses at two different assignments. In hindsight, at least one of those was a terrible decision. Military pilots tend to move so often that there is almost no way to avoid losing a lot of money on a home purchase. Unless you’re willing to study and put a lot of time and effort into House Hacking, I recommend you rent homes while you’re serving on Active Duty. However, if homeownership makes sense for you, a VA loan can be a great way to finance that purchase.

Credit Card and Other Debt Benefits (SCRA)

This advice is not military-specific, but it deserves immediate attention: do not EVER carry a balance on a credit card past the monthly due date. If you’re guilty of this dire sin, you need to read The Total Money Makeover by Dave Ramsey and follow his baby steps out of financial ruin. The rapidly-accumulating interest from high APR credit cards will eat you alive.

If you’re one of the millions of poor souls who was raised without realizing how bad credit card debt is, the military can give you some breathing room while you tread Mr. Ramsey’s path to recovery. There’s a federal law called the Servicemembers Civil Relief Act (SCRA). Among other things, it requires credit card companies and lenders to reduce the interest rate on your pre-military service debt to 6% or lower. NerdWallet has a great post about this program. However, don’t use this good deal as an excuse to spend more! Use it as an opportunity to pay your credit card off and use it responsibly from that point on.

Part of Dave Ramsey’s advice includes never using credit cards again. While this is absolutely appropriate until you get your financial habits under control, it’s not something that you have to do indefinitely. If you’re disciplined enough to spend less than you earn, and you pay your credit cards off in full every month, it’s okay to use credit cards. If you choose your credit cards wisely and spend strategically, you can get loads of airline, hotel, and other valuable points for spending money that you would have spent anyway. For a primer on Travel Rewards, check out Episode 9 of the ChooseFI podcast.

You don’t need to be in the military to take advantage of travel rewards, but military members do get a huge advantage here. Most credit card companies charge an annual fee with their card. With the best cards, this fee can be very steep. However, most of these companies will waive their annual fee for military members. These cards are usually good values with the fee, but if you can get the fee waived for cards like the Amex Platinum and Chase Sapphire Reserve, you’re making money from day one!

Space-A Travel

Speaking of world travel, if this is your thing the military has some exciting opportunities. Military members are allowed to hitch free rides on most military aircraft — a perk called Space Available Travel, or Space-A Travel for short. The USAF’s Air Mobility Command has a good website for this Space Available Travel. While you probably won’t want to catch a ride to downtown Kabul, there are plenty of flights to great destinations all over the world.

Space-A travel isn’t as glamorous, reliable, or comfortable as commercial air travel. However, if you’re flexible, this is a ticket to a world of amazing adventure.

Free Gym Access

While it may not have a huge equivalent dollar value, it’s worth noting that just about every US military base on the planet has a great gym. Military members and their families get access to these world-class facilities for free. These gyms also tend to offer free classes in everything from basic fitness to cycling to CrossFit for those who prefer to work out with a group. In a world where obesity has become an epidemic and more people die from things like heart disease than combat or even traffic accidents, having easy access to a gym is something to love about military service.

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Summary

There’s a lot that goes into calculating military pay and putting the myriad of benefits into perspective. We hope you found this overview to be informative and helpful if you’re considering a career as a military pilot. Although this article may seem exhaustive, the subject matter here actually only scratches the surface of the benefits you get from military service. Many of the links provided throughout can give you plenty of additional information about specific aspects of military pay and benefits. In addition, the staff at BogiDope is always working on new content and plans to cover some of these things in greater detail in future articles.