TAXES ON YOUR PAY
You must pay federal income tax on your Navy
The amount deducted depends upon the
withholding statement (W-4) you file with your
disbursing officer. You must pay federal income tax
on (1) basic pay, (2) incentive and special pay, (3)
certain travel pay, and (4) other pay as applicable.
You do not pay tax on allowances such as subsistence
and allowance for quarters.
Military personnel come under the Federal
Insurance Contributions Act (FICA), which provides
Social Security coverage for members of the armed
forces. FICA taxes are deducted from your monthly
pay and are currently limited to a specified maximum
during a calendar year.
You may also have to pay a state income tax to
your state of record. When you enter the Navy on
active duty, you fill out a DD Form 2058 to designate
your state of legal residence. Some states do not
require active-duty citizens to pay a state income tax,
and some states do not have any state income tax.
Check with your disbursing officer for additional
Payday takes place twice each month on dates
established by your commanding officer, normally the
1st and 15th of each month. The Department of
Defense has mandated that all service members elect
a financial institution to have their net pay directly
deposited. This election must be accomplished within
6 months after your entry into active duty.
Since you will probably have to pay many of your
bills by mail, having a checking account will be a
necessity. Most naval personnel have the opportunity
to join a Navy or Defense Credit Union, which will
provide them the opportunity to open a checking
account. Financial Institutions often have branch
offices conveniently located near most large
Remember, you can have your net pay
automatically deposited into your checking account
through the Direct Deposit System. Allotments can
also be paid to an account at a financial institution.
This Direct Deposit System (DDS) is in addition to
the Navy allotment system. If you change duty
stations, your direct deposit will continue while you
are on leave or in a travel status. If you are in transit
or have temporary duty before the DDS starts, you
can be paid by any military disbursing officer of the
Department of Defense or the Coast Guard. To
receive pay, you must present your pay record,
identification card, and original orders.
Do not carry large sums of cash on your person.
Since your profession requires that you travel in many
parts of the world, acquire the habit of carrying
travelers checks rather than cash. You can purchase
travelers checks from any bank or credit union. If
your checks are lost or stolen, you can obtain refunds
quickly, but you have little hope of ever getting back
any lost or stolen cash. Never leave cash unattended
in your stateroom or bachelor officers quarters
(BOQ). Remember, you are not the only one with a
key to your room.
Allotments of pay are important, useful, and
convenient. Your disbursing officer will help you fill
out the necessary allotment forms.
DFAS-CL will pay the amount of the allotment
each month to whomever you designate. Allotments
are normally designated for dependents, insurance,
savings accounts, checking accounts, and government
savings bonds. The Department of Defense Military
Pay and Allowances Entitlements Manual (DODPM)
outlines other types of allotments. Allotments
normally reach the intended person or agency by the
5th of the month, if the person or agency is located
within the continental United States (CONUS). Once
an allotment is started, it must remain active for at
least 3 months.
Changes to allotments require planning. If you
are on board a ship and want to start an allotment,
ensure the disbursing officer has the appropriate
documentation no later than the 17th of the month
preceding the month in which you wish the allotment
to start. Members serviced by a PSD have a little
more time; the deadline is the 28th of the preceding
One extra note: If you should learn in advance
that you will be reporting to a deployed ship, you
would be wise to consult a disbursing officer (before
reporting aboard) about requesting an allotment for
your dependents. An allotment will ensure they have
an income while you are away.