While most of us are aware of the amount of money that gets deposited into our bank accounts, not as many of us stop to review the various entitlements, deductions, and allotments that result in that net pay. These categories are listed in columns under those headings on your pay statements. You should become familiar with these because many will continue when you are commissioned.
Under entitlements, you will see your gross cadet or midshipmen pay. According to U.S. Code (37 U.S. Code § 203), “A cadet at the United States Military Academy, the United States Air Force Academy, or the Coast Guard Academy, or a midshipman at the United States Naval Academy, is entitled to monthly cadet pay, or midshipman pay, at the monthly rate equal to 35 percent of the basic pay of a commissioned officer in the pay grade O–1 with less than two years of service.” In 2016, this comes out to about $1,040.
Under deductions you will see various taxes, which all of us pay: State income tax, federal income tax, Federal Insurance Contributions Act tax (“FICA” tax or “Social Security” tax, which is 6.2% of one’s earned income up to $118,500 for 2016), and Medicare Tax (1.45% of your earned income in 2016, with no cap). And, by the way, the military matches your FICA and Medicare contributions. You may also see deductions in this section that go into your “cadet” or “midshipmen” account, which pays for products and services that the academies provide for you (for example, uniforms and haircuts).
Lastly, under allotments you will see items that you have designated to be paid out of your income. A common example is paying for life insurance. Although you may already have SGLI, there is nothing precluding you from obtaining additional insurance or replacing SGLI outright. In fact, AAFMAA’s Level Term I insurance provides coverage similar to SGLI at a lower premium.
What’s the bottom line? In general, your entitlements, minus your deductions and allotments should equal the net pay that gets deposited into your checking account. Spot check that once in a while and you will have a better understanding regarding the sources and uses of your income.