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Allotments are a financial tool that allow military members to pay certain bills directly from their paycheck. Because an allotment is automated, it’s (mostly) foolproof, ensuring that your essential obligations get paid even when money is tight or you’re in a busy season of life. Whether you’re low on cash, deployed, mid-PCS or have limited comms, setting up an allotment means your financial obligations get met.
What Is a Military Allotment?
An allotment is a way to send money to a company or individual directly from your paycheck. Allotments can be used by active-duty service members, reservists on extended orders, midshipmen, cadets or retirees receiving military retirement pay.
When you set up an allotment, the Defense Finance and Accounting Service deducts the allotment in its calculation of your total monthly pay. This includes both the calculation that determines your mid-month pay and the one that determines your end-of-month pay. In effect, you’ll have half of the allotment taken out of each paycheck. Then, DFAS will submit the payment to the appropriate individual at the beginning of the next month.
What Can You Pay By Allotment?
There’s a very specific list of things that you can pay by allotment. These eligible items are broken into two categories: discretionary allotments and non-discretionary allotments. You may have up to six discretionary allotments and an unlimited number of non-discretionary allotments.
Discretionary allotments are paid to non-government recipients. This might include rent or mortgage payments, money sent to a family member, insurance payments and money being sent to a bank account, investment account or the Savings Deposit Program.
Non-discretionary allotments are made to government agencies or certain nonprofit organizations. This includes repayment of debts owed to the government, charitable payments to the branch relief societies, loan payments to relief societies or the American Red Cross, and payments for delinquent taxes.
Active-duty service members cannot use an allotment to pay for personal property. For purposes of allotments, personal property means items such as cars, computers, jewelry, furniture or appliances. When starting a new allotment, service members must attest that “Under the penalty of the Uniform Code of Military Justice, I certify that this allotment is NOT for the purchase, lease, or rental of personal property or payment toward personal property.” There is no similar restriction on retirees.
How to Set Up an Allotment
How you start an allotment depends on who will receive the money. Discretionary allotments are set up via MyPay or using DD Form 2558, Authorization to Start, Stop, or Change An Allotment. Non-discretionary allotments are set up when you give permission to the organization. For example, if you receive a loan from Army Emergency Relief, part of your paperwork is your giving them permission to start an allotment for repayment of that loan.
Depending on who is getting the money and when they need to get it, you may need to make arrangements to pay them for the first month. For example, let’s say you usually sent your mother $50 from each paycheck. If you set up an allotment for $100 a month at the beginning of March, DFAS will deduct $50 from your mid-month pay, just like you would usually send your mother. However, she won’t receive that immediately. Instead, it will be set aside until it gets combined with the $50 taken out of your end-of-month paycheck. Only then will DFAS send the money to your mother. If she will need the $50 in the middle of the month, you will need to send that separately — even though you’re also having it taken out of your mid-month pay.
Pros and Cons of Allotments
Allotments can be a valuable financial planning tool, but financial technology means that you can do the same thing directly from your bank or credit union. So why would you choose an allotment?
The primary reason is that allotments come out of your pay before it goes to your bank or credit union. That means that things paid by allotment will always get paid, regardless of what you do in your bank account. Bills paid by allotment won’t be messed up even if you accidentally overdraw your account, change banks or are the victim of fraud.
On the flip side, problems can still happen with allotments. If you don’t have enough pay to fill the allotment, DFAS can’t process it. And as my wise friend Rob says, “You have not seen your last pay error.” So if your pay gets messed up, your allotment could get messed up, too.
Previously in this series:
Part 1: 2026 Guide to Pay and Allowances for Military Service Members, Veterans and Retirees
Part 2: Understanding All the Deductions on Your 2026 Military Leave and Earnings Statements
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26 Comments
The distinction between mid-month pay and end-of-month pay is important to understand when setting up an allotment, can someone elaborate on how this works?
The fact that allotments can be used to pay for charitable donations to branch relief societies is a great way to give back to the community.
I’m skeptical about the security of allotments, especially with the recent data breaches in the military, how can we ensure our financial information is protected?
That’s a valid concern, but the Defense Finance and Accounting Service has implemented various security measures to protect sensitive information.
I’ve been using allotments to pay my mortgage, and it’s been a huge relief to know that it’s being taken care of automatically.
The article mentions that allotments can be used to pay for insurance payments, can someone elaborate on what types of insurance are eligible?
The fact that allotments can be used to pay for bank account or investment account payments is a convenient option for managing my finances.
I’ve been using allotments to send money to my family members, and it’s been a lifesaver, especially during busy seasons of life.
That’s great to hear, how do you find the process of setting up and managing allotments through MyPay or DD Form 2558?
I’m curious about the process of stopping or changing an allotment, can someone provide guidance on how to do this?
The idea of having half of the allotment taken out of each paycheck seems reasonable, but what if I need to make changes to my allotment amount or recipient?
The article mentions that the Defense Finance and Accounting Service deducts the allotment in its calculation of total monthly pay, but how does this affect my take-home pay?
As a midshipman, I’m eligible for allotments, but I’m unsure about the process of setting one up, can someone provide guidance?
I’m interested in using allotments to pay for my delinquent taxes, can someone explain the process of setting this up?
As a retiree, I’m glad to know that there’s no restriction on using allotments for personal property, unlike active-duty service members.
The article mentions that retirees can use allotments to pay for various expenses, but what are the limitations and restrictions for retirees?
The fact that active-duty service members cannot use an allotment to pay for personal property, such as cars or jewelry, is a restriction I wasn’t aware of.
The article highlights the importance of understanding the rules and restrictions surrounding allotments, and I appreciate the clarification on what can and cannot be paid using this method.
The process of setting up an allotment seems straightforward, but what happens if there’s an error or discrepancy in the payment?
According to the article, the Defense Finance and Accounting Service is responsible for handling any errors or discrepancies, and you can contact them for assistance.
The distinction between discretionary and non-discretionary allotments is crucial, and I appreciate the article breaking down the eligible items for each category.
I’ve been using allotments to pay my loan payments to the American Red Cross, and it’s been a huge help in managing my debt.
I’m curious about the Savings Deposit Program mentioned in the article, can someone provide more information on how it works and its benefits?
I’m considering setting up an allotment for my rent payment, as mentioned in the article, to ensure it’s paid on time even when I’m deployed or have limited comms.
The article highlights the importance of ensuring that allotments are not used for personal property, but what are the consequences of violating this rule?
According to the Uniform Code of Military Justice, violating this rule can result in penalties, so it’s essential to understand the restrictions before setting up an allotment.