7 Strategies for Saving Money in the Military (and After)

Military service members and their families can save lots of money each year. If you are serving or have served, you’re not going to want to miss these money-saving tips.
Last updated May 13, 2021 | By Matt Miczulski
7 Strategies for Saving Money in the Military (and After)

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Having served in the military, I’ve made it a habit to ask for a military discount everywhere I go. It’s something I started doing after joining in 2005, and it’s a habit I’ve continued as a veteran. Whether you’re in a retail store, museum, or hotel, discounts are frequently available to those who have served, and they are something every member of the military — past or present — and their families, should inquire about.

And discounts are just one of the many ways you can save money based on your military service. I’ll discuss in detail the sorts of discounts available to service members, as well as a handful of other tips for how to save money in the military.

In this article

On- and off-base military discounts

On-base discounts

If you’re a qualifying service member, commissaries and exchanges provide the chance to shop for groceries, goods, and services free of sales tax and sometimes at discount prices. The U.S. Department of Defense and U.S. Veterans Affairs recently extended this benefit to Purple Heart recipients, former prisoners of war, and all service-connected disabled veterans.

Most items in an on-base grocery store, or commissary, are sold at cost plus a 5% surcharge. The Defense Commissary Agency (DeCA) negotiates prices with manufacturers and passes those prices directly to you. For instance, a manufacturer may decide to sell milk for $1.50 a gallon to the DeCA, so that’s the price you’ll see on the price tag at the commissary. With the surcharge, that gallon of milk costs just $1.58. Just be aware that prices can fluctuate depending on negotiations, so although you might receive big savings one day, the savings might not be as great two weeks later.

The on-base department store, or exchange, is similar to a strip mall and offers many of the brands and products you’d find in regular department stores or malls. You can often find specialty stores, a barbershop, dry cleaning services, fast food restaurants, lawn and garden shops, and more. Prices at the exchange are typically cheaper than anywhere else, and the added benefit of not having to pay sales tax keeps prices even lower. If you do find lower prices at a local competitor, the exchange will match the competitor’s current price.

Although commissaries and exchanges offer service members a way to shop at a discount, you should still comparison shop to make sure you’re always getting the most savings.

Off-base discounts

There are many businesses that offer discounts to service members, retired military, veterans, spouses, and military families, from retail stores to hotels to theme parks to car rentals. Although many businesses advertise these discounts, others may only extend them upon request. For that reason, it’s a good idea to always ask. Even if a store doesn’t specifically offer a military discount, they may provide some sort of a discount just for asking. This happens to me all the time, so it’s worth doing.

Military discounts can vary widely. 10% off your purchase is a common discount for retail stores; theme parks may offer 10% to 20% off the general admission price or even free entrance (especially on days like Memorial Day and Veterans Day); and several car manufacturers will take several hundred dollars — maybe even a couple thousand — off a vehicle purchase price.

The American Legion and MilitaryBenefits.info both provide details on a number of establishments that offer military discounts. When in doubt, ask for a military discount.

Tax breaks for military members

The federal government offers a number of tax breaks for the military. Depending on your military service, this can range from tax-free income to penalty-free retirement plan withdrawals to deducting your moving expenses when you file your taxes.

Earned income tax credit (EITC)

Any form of pay you receive as an enlisted service member while on deployment in a combat zone is exempt from federal income tax. This changes for officers, who receive a federal income tax exclusion up to the highest rate of enlisted pay.

In addition to being exempt from federal income tax, you can use your combat pay to further reduce the amount of tax you owe by including it when calculating the Earned Income Tax Credit (EITC). The EITC is a refundable tax credit for working people with low income. Although you don’t have to report combat pay for purposes of the EITC, you may choose to include it as a way to decrease the amount of tax you owe. A higher EITC amount means you’ll have a lower tax burden, and a lower tax burden could lead to a larger refund.

This is called the nontaxable combat pay election (NCPE), and here’s how it works. Say for instance, you’re married and filing jointly for tax year 2019. You have two children and have $10,000 in taxable wages and $10,000 in nontaxable combat pay. You choose not to use the NCPE, so you don’t include your $10,000 in nontaxable combat pay. Your EITC will be only $4,010. If you choose to include your combat pay, however, your earned income will increase to $20,000. As a result, your estimated EITC will increase by more than $1,000 to $5,828, which reduces your overall taxable income by quite a bit.

Filing status Married, filing jointly Married, filing jointly
Number of children 2 2
Taxable wages $10,000 $10,000
Nontaxable wages $10,000 $10,000
Did you take the nontaxable combat pay election (NCPE)? No Yes
Total Earned Income Tax Credit (EITC) $4,010 $5,428

It’s recommended you estimate the amount of your credit with and without your combat pay to ensure you’re receiving the highest credit. If you decide to include combat pay as earned income in determining your EITC, you must include the entire amount, not just a portion.

Moving expenses deduction

The Tax Cuts and Jobs Act of 2017 eliminated the moving expenses deduction for most people; however, some military service members may still be eligible.

To be eligible for the moving expenses deduction, you must be an active duty member of the U.S. Armed Forces. Your move must be due to a military order and permanent change of duty station, and you can deduct only your unreimbursed moving expenses.

Moving expenses you may be eligible to deduct include the cost of packing and transporting your personal belongings and household goods, the cost of connecting or disconnecting utilities, lodging expenses, and car transportation expenses, to name a few.

Travel expense deduction

If you’re a member of a reserve component of the Armed Forces, such as the Army National Guard, Army Reserve, Navy Reserve, etc., you can deduct your unreimbursed travel expenses if you travel more than 100 miles away from home as a part of your services as a member of the reserves. Eligible expenses include things like mileage, meals, lodging, etc.

Banking product discounts for military members

There are a number of banks outside your typical military banks that offer banking benefits to military members and their families. These services can include fee-free checking accounts, rent-free safety deposit boxes, and fee-free ATM withdrawals outside your network. Here are a few banks that provide additional benefits to military members:

Chase

Chase Premier Plus Checking

Active, reserve, or National Guard service members, and veterans are eligible for:

  • No minimum balance
  • No $25 monthly service fee
  • 3-by-5-inch safe deposit box rent-free
  • Four non-Chase ATM transactions free of Chase fees each month
  • No fee for money orders or cashier’s checks

Active duty and reserve military service members of the Air Force, Army, Coast Guard, Marines, Navy, and National Guard are eligible for:

  • No fee from Chase at non-Chase ATMs
  • No fee from Chase on incoming or outgoing wire transfers
  • No fee from Chase for Foreign Exchange Rate Adjustments on debit card purchases or ATM withdrawals when you use your debit or ATM card in currencies other than U.S. dollars

Chase Total Business Checking

  • Waived $15 monthly service fee

Chase Business Line of Credit

  • Annual fee waived for first year

U.S. Bank

  • Any consumer checking account free of maintenance fees and minimum balance requirements
  • No U.S. Bank ATM transaction fees

Wells Fargo

Wells Fargo Worldwide Military Banking

  • Four U.S. domestic and four international ATM cash withdrawals at non-Wells Fargo ATMs each month at no charge

I recently opened a Chase Premier Plus Checking account at my local branch. I showed them my military ID and driver’s license and had a free checking account within minutes. This is a checking account that typically requires meeting certain requirements to bypass the $25 monthly fee. However, as prior military, I don’t have to worry about any of that.

Credit card benefits for the military

Just as some banks provide service members with a variety of banking benefits, a number of credit card lenders offer certain military benefits as well.

The Servicemembers Civil Relief Act (SCRA) already caps the amount of interest a credit card company can charge you during periods of active duty military service — no more than 6% per year on debt incurred prior to your military service. According to the U.S. Federal Reserve, the average credit card interest rate has been approximately 15% to 17% APR since the beginning of 2019.

The Military Lending Act (MLA), on the other hand, covers service members if they are extended credit while on active duty. The MLA limits interest rates and finance charges to 36% MAPR (Military Annual Percentage Rate). Although 36% seems high, it doesn’t only account for interest rates. The MAPR includes fees and charges in addition to the interest rate, including annual fees, finance charges, credit insurance premiums, and application fees. So this 36% cap actually represents a savings for military members.

Some credit card lenders take it a step further and eliminate fees altogether. This opportunity means that military can save big on credit cards. Here’s a list of major credit card issuers and their stances on fees:

Card issuer Fees waived
American Express Annual fees
Capital One All fees on credit cards opened prior to active duty period
Chase All Chase fees
Citi Annual fees on credit cards opened prior to active duty period
Discover Late fees and overlimit fees
U.S. Bank All fees on credit cards opened prior to active duty period

If you’re active duty military, you can take advantage of these fee waivers to save a significant amount of money each year, and you can also earn valuable credit card rewards. Rewards cards with great benefits that normally have high annual fees become much more affordable, and, therefore, that much more rewarding. For this reason, rewards cards such as The Platinum Card from American Express and the Chase Sapphire Reserve are some of the best credit cards for military. Do note, unlike typical credit cards, the Amex Platinum allows you to carry a balance for certain charges but not all.

Normally, The Platinum Card from American Express comes with a $695 (See rates and fees) annual fee. For most cardholders, this can be offset by taking advantage of benefits such as the lucrative welcome bonus: Earn 100,000 Membership Rewards points after spending $6,000 in the first 6 months, plus 10x points on eligible purchases at restaurants worldwide and when you Shop Small in the U.S. (up to $25,000 in combined purchases during your first 6 months). Not to mention the $200 in Uber credits and $100 in Saks Fifth Avenue credits. But as a military member who doesn't have to pay the $695 annual fee, you will find all these perks to be even more rewarding.

The same goes for the Chase Sapphire Reserve. The card has a sign-up bonus that allows you to earn 50,000 points after spending $4,000 on purchases in the first 3 months. That bonus plus the $300 annual travel credit and complimentary Priority Pass lounge access easily offset the $550 annual fee for anybody. But if you don’t have to pay the annual fee, this card becomes that much more beneficial to have in your wallet.

IRAs and TSPs

Before 2006, members of the U.S. Armed Forces were not able to make contributions to a Roth IRA using combat pay because it is not subject to federal income tax. However, the Heroes Earned Retirement Opportunities Act passed in 2006 changed that. Military members can contribute to a Roth IRA using their tax-free combat pay.

This is a huge benefit because one of the requirements for contributing to a Roth IRA is using money that’s already been taxed. This means you can make contributions to a Roth IRA that never was and never will be taxed.

Members of the uniformed services may also want to consider making contributions to a Thrift Savings Plan. A TSP is a retirement plan for Federal employees and military members that provides many of the same tax benefits of a 401(k). In 2012, the government added a Roth option to TSPs. Just like I explained above, service members can make contributions to their Roth TSP using tax-free dollars.

VA loans

Prospective homebuyers that have served in the military may be eligible to take part in the VA home loan program. Although you will still need to meet your lender’s credit and income requirements, a VA-backed home loan can be a big help. Eligibility depends on your discharge status and when and how long you served on active duty.

Although VA-guaranteed loans are provided by private lenders, the VA guarantees a portion of your loan, which can help you obtain more favorable financing terms. This can include lower interest rates and closing costs and no early repayment penalty. You may also be able to avoid having to make a downpayment altogether, and you won’t need mortgage insurance either.

You can use a VA-backed loan to:

  • Buy a home
  • Build a home
  • Refinance an existing non-VA loan, and
  • Refinance an existing VA loan for better terms

VA healthcare

As a service member, you may be eligible for VA healthcare. Depending on your income level, disability rating, and military service history, you may even be eligible for free healthcare services. Although VA healthcare often gets a bad rap, it can provide huge savings you’d otherwise pay in premiums each month. I’ve used VA healthcare for years now, and I’ve never had an issue.

If you’re deemed eligible for VA healthcare, you’ll be assigned to one of eight priority groups depending on your income level, disability rating, and military service history. Although some service members will have to pay copays for healthcare services, others are exempt. In general, you can receive free healthcare for any illness or injury that is determined to be related to your military service.

Healthcare benefits may also be extended to spouses and dependents of veterans or service members. This depends on factors such as the veteran or service member’s military service or disability rating.

Bottom line on saving money in the military

Depending on your military service, you may be eligible for certain tax breaks, waived fees, and even free healthcare. Your military service opens the door to a number of savings you should be taking advantage of. Whether you’re shopping, going to see a movie, or renting a car, always ask whether a military discount or benefit is offered. Remembering to take advantage of discounts you're entitled to is an important step in learning how to manage your money better.

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Author Details

Matt Miczulski Matt Miczulski is a personal finance writer specializing in financial news, budget travel, banking, and debt. His interest in personal finance took off after eliminating $30,000 in debt in just over a year, and his goal is to help others learn how to get ahead with better money management strategies. A lover of history, Matt hopes to use his passion for storytelling to shine a new light on how people think about money. His work has also been featured on MoneyDoneRight and Recruiter.com.