Military Severance Pay: Eligibility, Calculation & Benefits

Military members from all branches may be eligible for severance pay.

When a service member involuntarily leaves the military with an honorable discharge, he may be eligible for military severance pay. This one-time payout was instituted to better enable military personnel to transition to civilian life after a lengthy period of service. It takes into consideration the military member's length of service, rank and several other variables, such as disability. Military members may be eligible for severance pay with as little as six full years of military service.

Step 1

Ensure your separation package is complete. You will need your DD-220 active-duty report, paperwork indicating your discharge status, paperwork indicating whether your superiors believed you were promotable and your date of discharge.

Step 2

Determine whether you are eligible for full or half pay. A military member who is being involuntarily separated from service who is otherwise in good standing and fully promotable will receive full pay. Military members with general or medical discharges or members who may not have been promotable will probably receive half pay.

Step 3

Find the regular monthly pay for your rank at the time of your separation on the Defense Finance and Accounting Service's military pay tables (see Resource).

Step 4

Count your years of service, including full months as fractions of a year. Multiply this number by your regular monthly pay from the previous step.

Step 5

Multiply the number from the previous step by 12, then by 10 percent. If you are anticipating half pay, divide the number by 2. Your result is the amount of military severance pay you can anticipate before taxes.

Tip

If possible, have your final date of severance occur while you are in a tax-free war zone, to eliminate federal income tax.

Warning

If you plan to re-enlist in another military branch, discuss all the ramifications of taking severance pay with your recruiter before finalizing your plans. Military severance pay can affect future pensions and benefits.