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SDP Calculator

10 USC § 1035

The 10% guaranteed-return savings account for deployed service members. Use it.

SDP value after deployment + 90 days

$9,615.17

$615.17 in interest on $9,000.00 deposited · After-tax net interest: $479.83

Deposited

$9,000.00

Gross interest

$615.17

Federal tax

-$135.34

Return on deposits (annualized)

6.84%

Sources: 10 U.S.C. § 1035 · DoD FMR Vol 7A, Ch 51 ¶2.6.3, ¶2.7. Interest is 10% per annum compounded quarterly on the average quarterly balance, on a maximum base of $10,000 (principal + accrued interest); the excess above $10,000 earns nothing. "Return on deposits" is your interest divided by what you put in, annualized — it runs below 10% whenever deposits land late in the deployment. Interest is taxable as ordinary income (CZTE does NOT apply to SDP interest).

Your deployment savings plan

Practical ceiling = your monthly unallotted pay and allowances (FMR Vol 7A, Ch 51 ¶2.5.1.1) — you cannot deposit outside savings

Eligibility requires 30+ consecutive days (or 1 day in each of 3 consecutive months) in a qualifying area

Interest is taxable; CZTE does NOT apply to SDP interest

⚠ You will NOT hit the $10,000 cap at this rate. Increase monthly deposit to $1,112.00 or higher to maximize SDP value.

Why SDP beats almost everything else

SDP10.00% APR · 10.38% APY under $10k · guaranteed
High-yield savings accounts (track short-term rates)~4%
TSP G Fund (trailing 12-month return, Jul 2026)~4.4%
1-year Treasury (Jul 2026)~4.0%
S&P 500 long-run average~10% (but volatile)

SDP's 10% return is GUARANTEED by the federal government. No guaranteed instrument on the market comes close. Market figures are approximate, for context only (Treasury: treasury.gov daily yield curve; G Fund: TSP fund performance data).

What SDP is and why it exists

The Savings Deposit Program (SDP) is a DoD-administered savings account authorized by 10 U.S.C. § 1035 that pays 10% guaranteed annual interest on deposits up to $10,000 for service members deployed to a designated combat zone. The program in its current form dates to 1966, when Public Law 89-538 amended 10 U.S.C. § 1035 to raise the interest ceiling from a fixed 4% to up to 10%, open the program to all members serving overseas, set the $10,000 interest cap, and add the 90-day post-departure accrual rule.

The statute caps the rate at 10% a year ("interest at a rate prescribed by the President, not to exceed 10 percent a year" — 10 U.S.C. § 1035(b)), and DoD's implementing regulation pays the full 10% (FMR Vol 7A, Ch 51 ¶2.5.1). With the volatile S&P 500 averaging "only" about 10% over the long run, SDP is among the highest guaranteed returns available anywhere in the U.S. financial system.

Eligibility

Per FMR Vol 7A, Ch 51 ¶2.1.1, you are eligible if you are serving in an assignment outside the United States, its possessions, or Puerto Rico for at least 30 consecutive days OR at least 1 day in each of 3 consecutive months, and you are serving either:

  • (a) in a designated Combat Zone (CZ) — combat-zone service alone qualifies; no Hostile Fire or Imminent Danger Pay is required; or
  • (b) while qualified to receive Hostile Fire Pay or Imminent Danger Pay (HFP $225/month; IDP prorated daily, up to $225/month — FMR Vol 7A, Ch 10) in a Qualified Hazardous Duty Area (QHDA) or a designated direct-support area of a CZ

Active-duty members and Reservists on active orders both qualify. For the current lists of designated CZs, QHDAs, and direct-support areas, see FMR Vol 7A, Ch 44 (Tables 44-1, 44-2, 44-3) or the DFAS website.

Sign up through your finance office in-theater. You can begin depositing once you clear the 30-day (or 1-day-in-3-months) mark, and your initial deposit may cover the unallotted pay you earned starting from your first day of arrival in the SDP area (¶2.5.1.3).

Mechanics

  • Deposit method: Allotment from your military pay, check, or cash, in amounts of $5 or more. Each deposit is capped at your unallotted current pay and allowances for the period — you cannot fund SDP from outside savings or a tax refund (¶2.5.1.1, ¶2.2.3).
  • Maximum deposit: $10,000 of cumulative principal. Interest is computed on a maximum base of $10,000 (principal and accrued interest combined), so interest that pushes your balance above $10,000 earns nothing — and that excess interest may be withdrawn quarterly on request (¶2.12).
  • Interest rate: 10% per annum, compounded quarterly on the average quarterly balance (the balance on the 10th of each month in the quarter, divided by three) — 10.38% APY below the cap. Once $10,000 is on deposit, the credit becomes flat simple interest of $250 per quarter (¶2.6.3, ¶2.7.1.3).
  • When interest starts: Deposits made on or before the 10th of a month accrue interest from the 1st of that month; deposits made after the 10th accrue from the 1st of the following month (¶2.6.3).
  • When interest stops: 90 days (day-for-day) after you leave the SDP area. If the 90th day falls anywhere other than the last day of a month, interest accrues only through the last day of the preceding month (¶2.8.2). Withdraw your funds then — if you make no withdrawal within 120 days, DFAS automatically transfers the balance to your military pay account (¶2.13).
  • Withdrawals: Generally taken after you depart the SDP area, on request. While still deployed, an emergency withdrawal may be authorized by your commanding officer when your health or welfare — or a dependent's — would be jeopardized without it (¶2.9).
  • Tax: Interest is taxable as ordinary income on Form 1099-INT (¶2.6.4). CZTE does NOT apply to SDP interest — the exclusion covers military compensation earned during qualifying combat-zone service (all of it for enlisted members and warrant officers; capped for commissioned officers — FMR Vol 7A, Ch 44 ¶2.2.1), not interest income.

Best practice — fill the $10k cap fast

Maximize SDP by hitting the $10,000 cap as quickly as possible. The longer your $10k sits earning 10%, the more total interest you accumulate.

Example A — slow fill: Deposit $500/month for 12 months = $6,000 deposited — you never reach the $10,000 cap. Total interest after a 12-month deployment + 90 days: roughly $490.

Example B — front-load: Deposit your full unallotted pay each month from your first eligible deposit. Say that is $2,500/month — you reach the $10,000 principal cap at month 4, and from then on the $10,000 earns flat simple interest of $250 per quarter. Total interest after a 12-month deployment + 90 days: roughly $1,125. A first deposit that large only works if your unallotted pay for the period is actually that high (¶2.5.1.1), though your initial deposit may include everything you earned since your first day of arrival (¶2.5.1.3).

Where the front-load money comes from: deposits are capped at your unallotted current pay and allowances for each period (FMR Vol 7A, Ch 51 ¶2.5.1) — you cannot fund them from outside savings or a tax refund, and you may not stockpile back pay before you deploy in order to dump it in later (¶2.5.1.2). To front-load, minimize allotments and deposit your maximum unallotted pay — including CZTE-tax-free basic pay and any reenlistment bonus paid in theater (¶2.2.3) — every month until you hit $10,000.

SDP + TSP + Roth IRA stacking strategy

SDP, TSP, and Roth IRA work together. The optimal deployed-savings hierarchy for most service members:

  1. Max SDP first ($10,000 cap). Guaranteed 10% is unbeatable. Use early CZ pay (tax-free) to fund.
  2. Max Roth TSP next, to the $24,500 IRS elective-deferral limit for 2026. Roth contributions from CZ pay are double-excluded: never taxed in, never taxed out. Note that Roth TSP is capped at the elective-deferral limit even in a CZ (FMR Vol 7A, Ch 51 ¶3.2.2.1) — contributions from tax-exempt CZ pay beyond $24,500 must go to traditional TSP, which then counts against the $72,000 annual-additions limit for 2026 (¶3.2.2.2, ¶3.2.2.3).
  3. Max Roth IRA next ($7,500 IRS limit for 2026). Funded with already-untaxed CZ pay; grows tax-free.
  4. Then taxable brokerage or HYSA. After all tax-advantaged accounts are maxed, additional savings go to taxable.

A 12-month deployment, fully optimized, can put $80,000+ of new savings across these vehicles ($10,000 SDP + $24,500 Roth TSP + tax-exempt traditional TSP toward the $72,000 additions limit + $7,500 Roth IRA). The Roth TSP and Roth IRA portions funded from CZTE pay grow and come out tax-free; SDP interest remains taxable.

When SDP is NOT the right move

SDP is almost always good, but consider alternatives if:

  • You have high-interest debt — paying off any debt charging more than 10% APR (most credit cards) beats SDP's guaranteed 10%; the SCRA 6% cap may apply to some pre-service debt
  • You haven't maxed your Roth TSP/IRA contributions yet — those are higher long-term value
  • Your emergency fund is below 3-6 months expenses — keep some liquidity outside SDP since withdrawals are restricted
  • You need quick access to cash — while you are still in the SDP area, funds come out only through a commanding-officer-authorized emergency withdrawal (FMR Vol 7A, Ch 51 ¶2.9)

For most deployed members with already-good financial hygiene (debt-free, fully funded retirement accounts), SDP is the highest guaranteed-return savings vehicle available.

FAQ

SDP — frequently asked questions

What is the Savings Deposit Program (SDP)?
SDP is a DoD-administered savings account authorized by 10 U.S.C. § 1035 that pays 10% guaranteed annual interest for members deployed to a designated combat zone (or drawing HFP/IDP in a QHDA or designated direct-support area). Interest is compounded quarterly on the average quarterly balance — 10.38% APY — on a maximum base of $10,000 of principal plus accrued interest; nothing is paid on the excess above $10,000 (DoD FMR Vol 7A, Ch 51 ¶2.6.3). The program in its current form dates to 1966, when Public Law 89-538 amended 10 U.S.C. § 1035 (raising the interest ceiling from a fixed 4% to up to 10% and setting the $10,000 cap). Among the highest guaranteed returns in the U.S. financial system.
Who is eligible for SDP?
Per DoD FMR Vol 7A, Ch 51 ¶2.1.1: active-duty members and Reservists on active orders serving in an assignment outside the United States, its possessions, or Puerto Rico for at least 30 consecutive days (or at least 1 day in each of 3 consecutive months), EITHER (a) in a designated Combat Zone (CZ) — combat-zone service alone qualifies, no HFP/IDP required — OR (b) while qualified to receive Hostile Fire Pay or Imminent Danger Pay in a Qualified Hazardous Duty Area (QHDA) or a designated direct-support area of a CZ. See FMR Vol 7A, Ch 44 (Tables 44-1, 44-2, 44-3) or the DFAS website for current area listings. Sign up through your finance office in-theater.
How much can I deposit in SDP?
Cumulative principal is capped at $10,000, and each deposit is limited to your unallotted current pay and allowances for the period (DoD FMR Vol 7A, Ch 51 ¶2.5.1.1) — you cannot fund SDP from outside savings or a tax refund. Interest is computed on a maximum base of $10,000 (principal plus accrued interest combined); interest that pushes you above $10,000 earns nothing and may be withdrawn quarterly on request (¶2.12). Deposit via allotment from military pay, check, or cash in amounts of $5 or more. The 30-day eligibility mark must pass first, but your initial deposit may cover unallotted pay earned since your first day of arrival in the SDP area (¶2.5.1.3).
How long does interest accrue?
Deposits made on or before the 10th of a month accrue interest from the 1st of that month; deposits made after the 10th accrue from the 1st of the following month (DoD FMR Vol 7A, Ch 51 ¶2.6.3). Interest stops 90 days (day-for-day) after you leave the SDP area, and if that 90th day is not the last day of a month, interest accrues only through the last day of the preceding month (¶2.8.2). Withdraw your funds then — if you make no withdrawal within 120 days, DFAS automatically transfers the balance to your military pay account (¶2.13). Maximize SDP by hitting the $10k cap as quickly as possible to extend the period of full $10k earning 10%.
Is SDP interest taxable?
Yes — interest is taxable as ordinary income, reported on Form 1099-INT. The Combat Zone Tax Exclusion (CZTE) does NOT apply to SDP interest. CZTE covers military compensation earned during qualifying combat-zone service (all of it for enlisted members and warrant officers; capped for commissioned officers — DoD FMR Vol 7A, Ch 44 ¶2.2.1), but SDP interest is investment income, not military compensation — it is taxed at your marginal rate.
Can I withdraw from SDP while still deployed?
Generally no — deposits plus interest are repaid on your request after you depart the SDP area (DoD FMR Vol 7A, Ch 51, Table 51-3). While still deployed, an emergency withdrawal may be authorized by your COMMANDING OFFICER, and only when your health or welfare (or that of a dependent) would be jeopardized without it (¶2.9). Separately, interest that pushes your balance above $10,000 may be withdrawn quarterly on request (¶2.12). Keep your emergency fund OUTSIDE SDP for normal liquidity needs.
How does SDP compare to Roth TSP for deployed members?
Both are valuable. SDP guarantees 10% on $10k cap = up to ~$1,000/year of interest. Roth TSP in a CZ is double-excluded: never taxed in (CZTE), never taxed out (Roth). In a CZ you can go past the $24,500 elective deferral limit up to the $72,000 annual additions limit (IRC § 415(c)), but every dollar above $24,500 must be tax-exempt contributions to Traditional TSP — Roth always counts against the $24,500 limit. That still allows much more total than SDP. Best strategy: max SDP FIRST (front-load to $10k), then max Roth TSP up to $24,500, then tax-exempt Traditional TSP toward the $72,000 additions limit, then Roth IRA, then taxable.

Keep going

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10 U.S.C. § 1035 · DoD FMR Vol 7A, Ch 51 (§ 2.0 SDP)

Results are estimates. Always verify with your finance office.