Overview
Key Facts
Helpful Resources
The Overseas Cost of Living Allowance (COLA) is a non-taxable
supplemental pay allowance, designed to offset overseas prices of
non-housing goods and services. Overseas COLA is paid to over
230,000 service members at a cost of $1.7 billion annually. For
Overseas COLA policies, see the Department of Defense
Financial Management Regulation (FMR), Volume 7A, Chapter 68.
• Overseas COLA is not a fixed amount and may vary for each
service member based on the member’s location, pay grade,
years of service, and number of dependents.
• Overseas COLA is based on a service member’s ‘spendable’
income; it does not consider a spouse’s income.
• Overseas COLA fluctuations should not be considered in
household budgeting. Fixed expenses, such as car payments,
should be based on what a service member can afford without
the allowance. Overseas COLA will fluctuate based on the
exchange rate and can increase or decrease from pay period to
pay period.
How Overseas COLA is Calculated
Overseas COLA is intended to equalize purchasing
power to ensure members can purchase a similar
level of goods and services overseas as they could if
they were stationed in Contiguous United States
(CONUS).
Overseas COLA is calculated by comparing the
prices of goods and services overseas with average
prices for equivalent goods and services in CONUS.
The result of this price comparison is an index that
reflects a cost of living. Members will only receive a
COLA if the costs are higher at an overseas location
than average CONUS. If prices in CONUS are rising
at a greater rate than those overseas, a member’s
Overseas COLA will decrease, and vice versa.
However, if prices fluctuate at the same rate, a
member’s Overseas COLA will stay the same.
Two surveys determine the relative cost of living
overseas compared with CONUS:
• Living Pattern Survey (LPS) - asks service
members where (what outlets) they shop and what
percentage of goods they purchase locally, at the
Commissary/Exchange, and via online
retailers/mail-order shopping. Service members
can have a direct impact on Overseas COLA
indexes by participating in the LPS every 3 years.
• Retail Price Schedule (RPS or Market Basket
Survey) - annually captures prices for nearly 120
goods and services based on outlets identified in
the most recent LPS.
Overseas COLA Calculator
https://www.travel.dod.mil/Allowances/Overseas-Cost-of-Living-
Allowance/Overseas-COLA-Rate-Lookup/
Overseas COLA Policies in the DoD FMR
https://comptroller.defense.gov/Portals/45/documents/fmr/current/07a/07a_
68.pdf
Active COLA Living Pattern Surveys (LPS)
https://www.travel.dod.mil/Allowances/Overseas-Cost-of-Living-
Allowance/Overseas-COLA-Data-Collection-Surveys/
FAQs: https://www.travel.dod.mil/Support/ALL-
FAQs/Article/2963206/OCONUS-cost-of-living-allowance/
DoD Overseas Station & Housing Allowance Process Guide
https://media.defense.gov/2022/Jul/13/2003034513/-1/-
1/0/DOD_OVERSEAS_STATION_AND_HOUSING_ALLOWANCE_PROC
ESS_GUIDE.PDF
