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Frequently Asked Questions

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FAQ | July 1, 2022

OCONUS Cost-of-Living Allowance

No. If the cost of living in an overseas area is the same as or lower than it is in average CONUS, you will not receive COLA.

If you are a member without dependents living in government quarters such as the barracks or aboard ship, you will receive a reduced COLA rate to reflect your lower living expenses. If you are a member with command sponsored dependents living in either on-base family housing or off-base housing, your COLA will not be reduced.

The Cost-of-Living index is based on data obtained through several sources, including data furnished by uniformed members assigned to each overseas location. The Department uses two surveys to determine the relative cost of living in an overseas location: a Living Pattern Survey (LPS) and a Retail Price Schedule (RPS).

The LPS asks Service members which local stores they frequent to buy a particular market basket of goods and services. The LPS also asks how much of their purchases (the percentage) are bought from particular sources of supply (i.e., on the local economy, at commissaries and exchanges, online, and brought from home). For example, the LPS may show that Service members typically buy 50% of their clothing in local stores (with foreign currency) and 50% at the on-base Exchange (with U.S. dollars).

The aggregate results from the LPS indicate the top three stores members utilize for each market basket item and the overall percentages from each source of supply. This data is used by price collectors in each DoD overseas location to conduct an annual market basket survey, or RPS, pricing approximately 150 goods and services from the outlets identified on the LPS.

The market basket prices obtained from an overseas RPS are compared with prices in average CONUS for equivalent goods and services at the same point in time. If the overseas market basket cost is greater than the average CONUS cost, Overseas COLA is paid.

The Department uses data obtained from the Department of Labor's Bureau of Labor Statistics (BLS) to compute spendable income for different family sizes and income levels. The BLS conducts consumer expenditure surveys and the results of these surveys indicate how Service members and their families typically spend their income. This data is used to annually update the spendable income tables used to calculate COLA. Lookup spendable income tables.

The data used to calculate spendable income for Overseas COLA payments is derived from the Bureau of Labor Statistics (BLS). The data demonstrates that when family size reaches five dependents, spendable income begins to stabilize. As family size increases, more income is devoted to housing (greater number of rooms/bedrooms), so there is less disposable income left over to spend on COLA items. Also, spendable income moderates with larger family size as increased costs are partially offset by purchasing bulk-quantity discounted items, and family members sharing books, games, electronics/appliances, and some clothing items. A Service member with five dependents has reached the point where they have almost maximized the percentage of income they devote to spending on COLA items for dependents.

No. COLA and OHA are separate allowances. COLA is designed to offset non-housing expenses; OHA partially reimburses for housing expenses when housing is not provided by the government.

The Department monitors foreign exchange rates daily. As the amount of foreign currency your dollar "buys" changes U.S. dollar weakens or strengthens against the foreign currency, COLA will increase or decrease to maintain your purchasing power. Learn more about currency fluctuations and exchange rates.

Overseas COLA is adjusted once a year based on data furnished by the overseas Command. All changes to COLA based on data must be reviewed and approved by representatives of the seven eight Uniformed Services before implementation can occur. Overseas COLA is adjusted as often as every pay period for currency fluctuations as determined by the appreciation/depreciation of the currency. Currency changes are implemented automatically, without Service approval, and help maintain member’s purchasing power over time.

Overseas COLA is adjusted only for the portion of income that the typical member spends on the local economy (in foreign currency). This ensures that currency adjusts appropriately according to local currency usage, and the currency adjustments neither over-fluctuate nor under-fluctuate compared to the amount of local currency utilized. For example, if the LPS for your area shows that typical members spend 50% of their income on the local economy and 50% on base in U.S. dollars, then only that portion of COLA based on local currency purchases is changed for currency fluctuations. If the value of the dollar depreciates 4% against the local currency, your COLA would increase 2%.