Why your overseas COLA keeps changing
Overseas COLA is not a fixed number the way BAH is. DTMO publishes a new index table as often as twice a month, and a location's index moves for two different reasons. The first is exchange rates: the part of the index that reflects shopping on the local economy is priced in yen, euros or won, so when the dollar strengthens your COLA falls and when it weakens your COLA rises. Those currency moves are applied in full the next pay period, up or down.
The second is the annual price survey. When new survey data raises an index, the increase lands the next pay period. When it lowers one, the FY24 National Defense Authorization Act caps the cut at 10 points and phases it in at 2 points a month, so a survey-driven drop shows up as a staircase on the chart above rather than a cliff.
How the rate is calculated
DoD computes overseas COLA from three published tables, in the order set out in the Financial Management Regulation, Volume 7A, Chapter 68. Your paygrade and years of service give an annual compensation figure, with a separate table for members with and without dependents. That figure and your number of command-sponsored dependents place you in the spendable income table, which estimates how much a household at that income spends on the goods and services COLA covers. The location's index minus 100 is the percentage of that spendable income you are paid, divided by 360 for a daily rate and multiplied by 30 for a pay month. The breakdown under the result shows each of those numbers for your inputs.
COLA is paid on spendable income rather than total pay on purpose: it is meant to offset the higher cost of everyday purchases, not rent, taxes or savings. Housing overseas is covered separately by the Overseas Housing Allowance, and in Alaska and Hawaii by BAH, which is why the comparison panel for those two states adds BAH to COLA.
Things that change the number
- Crossing a years-of-service step (over 4, over 6, over 8) raises annual compensation, which can move you into a higher spendable income bracket.
- Each additional command-sponsored dependent, up to five, raises spendable income. Dependents who are not command-sponsored do not count.
- Members without dependents who live in government quarters and eat in the dining facility draw a reduced rate. This calculator shows the full rate.
- Some locations also pay a COLA unique expense for mandatory local costs. It is added separately and is not included here.
Where the numbers come from
The annual compensation table (effective 1 January 2026), the spendable income table (effective 1 February 2026) and every index table since January 2025 are downloaded from the Defense Travel Management Office and read directly, without retyping. On the September 2026 tables the result was checked against DTMO's own overseas COLA calculator for three different grades, locations and family sizes, and matched to the fifth decimal of the daily rate. Full sourcing is on the methodology page.