About this entitlement
What you need to know — straight from the regulation
What CONUS COLA is
CONUS Cost-of-Living Allowance (CONUS COLA) is a supplemental payment made to service members assigned to designated high-cost Military Housing Areas (MHAs) within the continental United States. Unlike OCONUS COLA and most military allowances, CONUS COLA is taxable and is reported as wages on the W-2.
CONUS COLA is authorized under 37 U.S.C. § 403b and administered under DoD Financial Management Regulation (FMR), Volume 7A, Chapter 67. Eligible MHAs and rates are published by the Defense Travel Management Office (DTMO) and can be verified on the DTMO CONUS COLA Rate Lookup below.
37 U.S.C. § 403b · DoD FMR Vol. 7A, Chapter 67
How it is computed
CONUS COLA is computed as an index percentage applied to the member's "spendable income" — a portion of pay, published by the Defense Travel Management Office, that varies with grade, years of service, and dependency status. The index percentage for each eligible MHA reflects local costs for goods and services compared to the CONUS average. MHAs whose cost index falls below the trigger threshold lose eligibility.
DoD FMR Vol. 7A, Chapter 67
Tax treatment
CONUS COLA is taxable — it is included on the W-2 and is subject to federal income-tax withholding and, where applicable, state income-tax withholding (DoD FMR Vol. 7A, Table 44-4, Note 12: allowances created after September 9, 1986 are taxable unless specified otherwise). It is not subject to FICA (Social Security/Medicare) withholding — FMR Vol. 7A, Chapter 45, paragraph 2.2 limits military FICA wages to basic pay and a short list of other items that does not include CONUS COLA. This is different from OCONUS COLA, OHA, BAH, BAS, and most other military allowances, which are non-taxable.
DoD FMR Vol. 7A, Ch. 44 (Table 44-4) & Ch. 45, para. 2.2 · IRS Publication 3
OCONUS COLA on the same page
Overseas Cost-of-Living Allowance is a separate, non-taxable allowance under 37 U.S.C. § 405 for members at OCONUS duty stations where living costs exceed the CONUS average. DoD FMR Vol. 7A Chapter 68 sets the computation: annual spendable income (from annual compensation and the number of command-sponsored dependents) multiplied by (COLA index − 100) ÷ 100, divided by 360 for the daily rate (Tables 68-8 and 68-9).
The index is built from DTMO's Living Pattern Survey and Retail Price Schedule and is adjusted for exchange rates as often as twice a month (¶3.1.4–3.1.5). It starts the day you report and stops the day before you depart on PCS orders (¶3.2). The spendable income table is applied inside DTMO's Overseas COLA Rate Lookup, which is the source for the exact dollar amount.
DoD FMR Vol. 7A, Chapter 68 (January 2025), ¶3.1–3.2, ¶3.10, Tables 68-8 & 68-9 · 37 U.S.C. § 405
Source & references
- Primary source
- DTMO CONUS COLA Rate Lookup (travel.dod.mil) — view official publication
- Regulatory reference
- DoD FMR Vol. 7A, Chapter 67 · 37 U.S.C. § 403b
- Effective date
- January 1, 2026
- DTMO CONUS COLA rate lookup
- https://www.travel.dod.mil/Allowances/CONUS-Cost-of-Living-Allowance/CONUS-COLA-Rate-Lookup/
Military Toolkit is not affiliated with the Department of Defense, DFAS, DTMO, the Department of Veterans Affairs, or any government agency. Rates and rules on this page are pulled directly from the publications cited above. Always verify with your finance office, TMO, or the official rate page before making financial or planning decisions.