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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