Overseas Cost of Living Adjustments for 2025

What Is Overseas COLA?

Overseas Cost-of-Living Allowance (COLA) is a tax-free allowance paid to military service members stationed outside the continental United States (OCONUS) where living costs exceed those in the U.S. The allowance compensates for higher prices on everyday goods and services, helping military families maintain their purchasing power regardless of where they’re stationed.

Approximately 320,000 service members at over 600 overseas locations receive Overseas COLA, with the Department of Defense paying roughly $2 billion annually in these allowances. The average supplement is around $300 per month, though rates vary dramatically by location.

How Overseas COLA Works

Unlike fixed allowances like BAH, Overseas COLA is a dynamic allowance that can change every pay period based on:

• Local price surveys: Regular cost comparisons between overseas locations and CONUS
• Exchange rate fluctuations: Currency values affect purchasing power
• Your pay grade: Higher ranks receive larger COLA amounts
• Number of dependents: More family members means higher COLA
• Living situation: Government quarters vs. off-base housing affects rates

What Overseas COLA Covers

Overseas COLA is designed to offset higher costs for:

• Groceries and food items not available at the commissary
• Clothing and personal care items
• Transportation (fuel, public transit, vehicle costs)
• Entertainment and recreation
• Household goods and furnishings
• Local services (haircuts, dry cleaning, etc.)

Note: Housing costs are NOT included in COLA calculations. Those are addressed separately through Overseas Housing Allowance (OHA).

2025 COLA Rates by Location

Overseas COLA rates are location-specific and updated regularly. Here are representative 2025 monthly COLA amounts for common duty stations (E-6 with dependents):

Europe

Pacific Region

Middle East

Note: These are approximate ranges. Actual rates depend on pay grade, dependents, and current exchange rates. Use the official COLA calculator for exact amounts.

Factors That Affect Your COLA Rate

Pay Grade Impact

Higher pay grades receive larger COLA amounts because the allowance is calculated as a percentage of your spendable income index. An O-5 will receive significantly more COLA than an E-3 at the same location.

Dependent Status

COLA rates increase with command-sponsored dependents:

• Member only: Base rate
• With spouse: Higher rate
• With spouse and children: Highest rate

Government Quarters vs. Economy Housing

Service members living in government quarters (on-base housing) typically receive reduced COLA because some living costs are already provided.

Currency Exchange Rates

Because COLA adjusts for purchasing power, a weakening dollar against local currency will increase your COLA, while a strengthening dollar will decrease it. This can cause noticeable pay fluctuations.

COLA vs. Other Overseas Allowances

How to Check Your COLA Rate

The Defense Travel Management Office (DTMO) provides an official COLA calculator:

1. Visit DTMO COLA Rate Lookup
2. Enter your pay grade
3. Select your overseas location
4. Indicate number of dependents
5. Specify living situation (government quarters or economy)

Tips for Managing Overseas COLA

Don’t Budget COLA as Fixed Income

Because COLA can fluctuate significantly with exchange rates, avoid relying on it for fixed expenses like car payments. Build a budget based on base pay and treat COLA as supplemental.

Shop Smart

Use the commissary and exchange for U.S. products, but take advantage of local markets for fresh produce and local goods that may be cheaper than imported items.

Monitor Exchange Rates

Understanding currency trends helps you anticipate COLA changes. When the dollar is weak, your COLA increases but local goods cost more. When the dollar is strong, COLA decreases but your dollars go further.

Resources

• Defense Travel Management Office – Overseas COLA
• DTMO COLA Rate Calculator
• Military.com Overseas COLA Guide