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1 1 (December 5, 2023)

handle is hein.crs/govenpx0001 and id is 1 raw text is: Congre sional Research Service Inforrnng helegitive debate sin co 1914 Defense Primer: Regular Military Compensation Congress sets compensation levels for members of the Armed Forces through statutory authorizations and appropriations. When people talk about military pay, they are often only referring to basic pay. Although basic pay is normally the largest component of cash compensation that a servicemember receives, there are other types of military pay, allowances, and tax benefits that add significantly to it. Regular Military Compensation (RMC) is a statutorily defined measure of the cash or in-kind compensation elements which all servicemembers receive every payday. It is widely used as a basic measure of military cash compensation levels and for comparisons with civilian salary levels. For 2023, a mid-grade enlisted servicemember (E-5) received an annual average of $41,171 in basic pay, but an average of $76,290 in RMC. Regular Military Compensation (RMC) RMC, as defined in law, is the total of the following elements that a member of the uniformed services accrues or receives, directly or indirectly, in cash or in kind every payday: basic pay, basic allowance for housing, basic allowance for subsistence, and Federal tax advantage accruing to the aforementioned allowances because they are not subject to Federal income tax. (37 U.S.C. §101(25)) Military compensation is structured much differently than civilian compensation, making comparison difficult. RMC provides a more complete understanding of the cash compensation provided to all servicemembers and therefore is usually preferred over basic pay when comparing military with civilian compensation, analyzing the standards of living of military personnel, or studying military compensation trends. Basic Pay For most servicemembers, basic pay is the largest element of the compensation they receive in their paycheck and typically accounts for about 60% of an individual's RMC. All members of the Armed Forces receive basic pay, although the amount varies by pay grade (rank) and years of service (also called longevity). Table 1 provides illustrative examples of basic pay rates. Basic Allowance for Housing All servicemembers are entitled to either government- provided housing or a housing allowance. About 33% of servicemembers receive government-provided housing (in the form of barracks, dormitories, ship berthing, or government-owned family housing). The remainder receive a housing allowance to offset the costs of renting or purchasing housing in the civilian economy, or for renting privatized housing on-base. For those living in the United Updated December 5, 2023 States, this allowance is known as Basic Allowance for Housing (BAH). The amount of BAH a servicemember receives is based on three factors: paygrade (rank), geographic location, and whether the servicemember has dependents. Paygrade and dependency status are used to determine the type of accommodation-or housing profile-that would be appropriate for the servicemember (for example, one- bedroom apartment, two-bedroom townhouse, or three- bedroom single family home). Geographic location is used to determine the average costs associated with each of these housing profiles in a given locality. The median costs of these housing profiles are the basis for BAH rates, with some additional adjustments made on the basis of paygrade (that is, an E-7 without dependents will receive more than an E-6 without dependents, even though the appropriate housing profile for both of them is two bedroom apartment). As a result of this methodology, BAH rates are much higher in some areas than others. The intention is that servicemembers of similar paygrade and dependency status are able to pay for roughly comparable housing regardless of their duty location. Table 1 provides illustrative examples of annual BAH. Basic Allowance for Subsistence Nearly all servicemembers receive a monthly payment to defray their personal food costs, known as Basic Allowance for Subsistence (BAS). This allowance is provided at a flat rate. In 2023, enlisted personnel received $452.56 a month in BAS, while officers received $311.68 a month. Those who do not receive BAS-for example, enlisted personnel in basic training-receive government-provided meals. Federal Tax Advantage While the various types of military pay-basic pay, special pay, and incentive pay-are considered part of gross income and are usually subject to federal income tax, military allowances are generally not subject to federal income tax. The tax advantage generated by the exemption of the housing and subsistence allowances from federal income tax is a part of RMC. Table 1 provides the estimated tax advantage for the illustrative examples, but the precise value of the federal tax advantage for an individual servicemember will vary depending on his or her unique tax situation. Compensation Elements Not Included in RMC Special pays and bonuses, travel reimbursements, educational assistance, deferred compensation (i.e., an economic valuation of future retired pay and benefits), or any estimate of the cash value of non-monetary benefits such as health care, child care, recreational facilities, commissaries, and exchanges are excluded from RMC. As the value of these forms of compensation can be substantial,

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