DOD updates overseas Cost-of-Living Allowance Adjustment process

By U.S. Department of Defense on May 9, 2023

The Overseas Cost-of-Living Allowance (OCOLA) is an allowance that ensures our service members who are assigned to a permanent duty station outside the contiguous U.S. (OCONUS) (i.e., foreign countries, U.S. territories, Alaska, and Hawaii) maintain the same level of purchasing power as service members stationed in CONUS locations - not less purchasing power, but not more either. 

The OCOLA rate pays a differential to service members in OCONUS locations for the increased cost of buying the same non-housing goods and services as are bought in CONUS. Based upon changes in the cost-of-living data and currency fluctuations (explained below), OCOLA rates increase or decrease over time. 

The Department of Defense released updates to the OCOLA adjustment process May 2, detailing OCOLA adjustments for this year. These adjustments are based on the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023. 

How OCOLA Rates Are Assessed 
The Department updates OCOLA rates based on an assessment of three primary data points: 

Annually, the Department compares OCONUS LPS and RPS data to the same data collected in CONUS (average CONUS baseline) to establish OCOLA for the OCONUS location. 

Based on the new NDAA legislation: 

For additional information on the OCOLA program, visit: