What are Cost of Living Allowances (COLA)?
This is money that is for the purpose of covering higher costs of food, transportation, clothing and other non-housing items. COLAS in the United States are taxable but overseas service members are not subject to taxes for their COLAS. The rates vary from $19 per month to over $500 per month in the most expensive United States cities. There are over 50,000 service members receiving COLAS in more than 40 stateside locations designated as high-cost when their cost of living exceeds the United States average cost of living by more than 8 percent. The average overseas COLA is $500 per month and over 250,000 service members receive this COLA in 625 locations.