Air Force Pilot Bonus 2025 – Aviation Bonus Program

The following post is from Jamie, the co-host of the Military Money Manual Podcast. Jamie took the Air Force pilot bonus in 2021.

Pilot Bonus 2025 Update

12 November 2024 – The FY25 bonus is out! Window opens today. The FY25 window will close NLT 8 September 2025 or earlier if the money runs out.

Air Force Pilot Bonus Podcast

The Air Force pilot bonus is authorized annually by Congress each fiscal year to retain highly-trained, experienced pilots and other rated officers. While this article mostly focuses on pilots, there are also bonuses available for Combat Systems Operators (CSOs), RPA pilots, and Air Battle Managers (ABMs). 

The FY25 pilot bonus details were released in early November 2024. This is great news and earlier than normal! It’s often been delayed by the lack of approved budgets, continuation resolutions (CRs), and last-minute changes to NDAA verbiage.

For full information, reference the official PSDM on MyFSS with key information copied below.

You can listen to the Military Money Manual Podcast episode #34 Jamie and Spencer (both Air Force pilots) recorded about the FY2022 bonus on Spotify, Apple, or below. We will record a new episode on the FY25 bonus soon.

Legacy vs Demo Bonus Programs

FY25 bonus consists of two different types of bonuses, each with a separate PSDM.

The Legacy AvB is for rated officers whose active duty service committment (ADSC) from Undergraduate Flying Training (UFT) expired already or expires in FY25.

The demo program offers an increased incentive for pilots who are still under their UPT ADSC. It includes a monetary incentive (Demonstration Program Monetary Incentive, DMPI) or an assignment preference (Demonstration Program Assignment of Preference, DPAP) option. The demo program offers up to $50,000 a year for an 8-12 year additional with up to $200,000 up front!

How much is the FY25 pilot bonus?

The legacy bonus for pilots could be worth up to $35,000 extra per year (for an 8-12 year contract).

There are many different tiers for the different career fields and whether or not you’ve ever signed a previous contract.

The demo program offers pilots whose UPT ADSC expires in FY26 up to $45,000 a year with $100,000 lump sum, up-front payment available. For those whose UPT contract expires in FY27, they can earn up to $50,000 a year with up to $200,000 lump sum available.

FY26 demo program chart:

FY27 demo program chart:

The demo program also offers an assignment preference option to either stay in place for an additional 36 months, move to preferred location (from a list the USAF provides that doesn’t include all cool places), or exclude a base from being your next assignment. 

The latest list of DPAP locations (on Milsuite) referenced in the PSDM is dated 2023. For example, an F-22 pilot could choose Langley, Elmendorf, Hickam, any AETC UPT IP location, ACC staff, or Langley ADAIR. A C-17 pilot could choose from Charleston, McChord, Dover, McGuire, Altus, any AETC UPT IP location, or AMC Staff at Scott (notice Hickam, Elmendorf, and Travis are not available). 

You can also do both the DPMI and DPAP versions or either one under the demo program.

My Story of Taking the Air Force Pilot Bonus

I did it. I took the Air Force pilot bonus in 2021. I signed my life away to the man again.

I signed up for the 5-year bonus as a mobility pilot. I made an extra $100,000 that year.

Why on earth would I lock myself in again when I was literally days away from tasting freedom for the first time since I was 17?!

First, let me explain more about the Air Force pilot bonus ­­­or Aviation Bonus (AvB) program. Then we’ll discuss why I made this choice.

The pilot bonus (or really any re-enlistment bonus or BRS continuation pay) can be an easy way to boost your Financial Independence (FI) goals, especially if you’re planning to stay in for a few more years anyway.

The program's specifics vary from year to year, but let’s take a look at the FY22 USAF Pilot Bonus. We'll break down the requirements, details, and pros/cons.

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What is the Air Force Pilot Bonus?

The USAF offers a pilot bonus at a varying amount each fiscal year to boost retention of highly-trained, experienced pilots and other rated officers.

Each year, the Air Force will evaluate which rated officer fields are more critically manned than others and target those for higher retention offers. For example, they may offer more money to an 11F (fighter pilot) than an 11M (mobility pilot) but no incentive to an 11R (reconnaissance pilot such as U-2).

The amounts are all authorized by Congress and within the congressionally mandated maximum bonuses.

The Air Force spends a lot of money to train its highly qualified pilots. After 11 or 12 years of active duty service, they’re looking at losing a highly qualified four-ship flight lead evaluator pilot or 3,000-hour C-17 evaluator pilot with over a thousand hours of combat time.

While the Air Force knows retaining experienced pilots is important, they also know they can’t pay enough to retain everyone they need. See 2019 RAND study: we’d need $100,000 per fighter pilot to retain talent. That will never happen.

It is definitely worth it to the Air Force, and the taxpayer, to increase their pay a little bit more and help keep them in the Air Force a few more years. You cannot replace a pilot with 12 years of experience and 3,500 hours with a new Lieutenant with 120 hours and some VR goggle time.

When is the Air Force pilot bonus released?

For the last couple years, the Air Force pilot bonus was released in early November. Historically, the program details were released around January or even later into April.

Some years, they offer 3-year bonuses, and other years they offer 5-years as the shorter. 5 years was the shortest option I had. 

Who is eligible for the Air Force pilot bonus?

The PSDM released in MyPers will have specifics of who is eligible. Under the legacy bonus, your ADSC from pilot training needs to expire in or before FY25 to be eligible.

Under the demo program, you can sign an AvB if your UPT ADSC expires in FY26 or FY27 too.

For example, if you earned your wings (likely end of T-6s now for future year groups) was 20 Nov 2014, your 10-year initial ADSC for UPT expires Nov 20, 2024. You’d be eligible for the FY2025 bonus.

Important Dates to Consider

AAviation Bonus (AvB) or pilot bonus contracts are effective on the latter of these three dates:

• Date AvB program opens (was 12 Nov 2024 for FY25)
• Your eligibility date, or
• Date you open your online application

Here are some contract date scenarios. If your UPT commitment ended May 20, 2025, you could submit your online application early, like on 15 Nov 2024, but your contract wouldn’t start until May 21, 2025. This means if you took the 3-year option, you’d be signing the contract through May 20, 2028.

If your pilot training commitment ended on 5 Nov 2024, you’d have to wait for the AvB program to open. So on 12 Nov, if you log in and open your application that day, your contract would start on 12 Nov 2024. If you did the 5-year bonus, you’d be free again on 11 Nov 2029.

If your classmate’s commitment also ended on 5 Nov 2024, but she didn’t decide what to do for a few months, the date she opened her application would be the contract start date. This could go all the way through 8 Sept 2025, when the program closes for FY25 (unless they run out of money first).

If your pilot training commitment expired before FY25 and you didn’t ever sign a contract or if your AvB contract is now expired, you may be eligible for a $20,000, $27,500, or $25,000 bonus for 3-4 years, 5-7 years, or 8-12 years, respectively. There is no up-front option for this tier of contracts.

Is the USAF AvB worth it?

If you’re doing it for the money, NO! There are so many other opportunities in life, especially with strong airline hiring in recent years. Being locked in with the Air Force (again) is not a decision you should rush into.

The demo program could give you up to $490,000 over the next 14 years of your career. This is not an insignificant amount of money. But it’s still less than what you could make if you go to an airline at your 11 or 12-year mark. You can also start building seniority while continuing to serve in the reserves or guard.

For some, it’s not only about the money. The desire to serve, the camaraderie, the desire to help others and lead, and many more personal reasons are all valid reasons to continue your career in the USAF.

It should never be ONLY about the money. But money and compensation is certainly a part of your decision calculus. 

If you’re doing it only for the money, do some more reading or listen to our podcast on FIRE (Financial Independence, Retire Early)- you shouldn’t NEED the bonus!

In my situation, I had already accepted a PCS that would keep me committed for 4 more years after the summer of 2021. By signing a 5-year bonus, I did promise an extra 10 months to the Air Force, which is a risk.

If they had offered a 3-year bonus this year, I would have done that. Now I’m basically risking that I don’t get tagged with a crappy deployment or assignment that would cover the last 10-12 months of my commitment before I have the option to 7-day opt and refuse the assignment.

In 2026 when my new contract expires, I’ll have 17 years in. At this point, you may wonder why I didn’t sign an 8-year bonus and take $200,000 upfront. Basically, my wife and I decided that the extra money and risk weren’t worth it. I want the freedom to choose.

I like the idea of being a free agent at 17 years when I’m vulnerable for an awful deal or 365-day deployment (which are quite rare to get non-vol’d to these days). My journey towards financial independence will position us to say “no” if we don’t think it’s best for our family.

And if I do stay in, I’ll likely be eligible for another bonus under the “contract expired” tier.

Should you trade your freedom for money?

The ability to turn something down is literally priceless to us. If I have to, I’ll separate at 17 years to protect my family. This isn't selfish. It's just choosing to serve my family first. A slightly different spin on “service before self” as in my mind it shouldn’t always lead to a sacrifice for the family. The 20-year military pension is cool, but it definitely isn’t going to be a make-or-break financial decision for me.

If I have to, I could also go to the reserves or guard and get some more “good years” there. Or maybe find an elusive AGR billet and still earn the same active-duty retirement. We only accepted the 5-year deal because it only further delayed free-agent status by a few months. It also gave us a chunk of money towards FI when we had already chosen to stay in anyway.

My 2021 Musings on The Future of the Bonuses

Note: funny to see how some these 2021 thoughts were implemented. I’m still waiting on the killer OPB bullet and commission check though.

Now, if any big wigs ever read this, I’m NOT saying the bonus is a waste. I hate to hear people say, “It's not about the money.” True, but it’s definitely part of the calculus. Almost no one is fully swayed into staying over an extra $25,000 a year. It’s not that good of a deal. Most military pilots, especially right now, are going to easily get hired at a major airline, and after 3-ish years, they’ll make more than a 15-year Major does.

However, even if insultingly small this year, the incentive must increase to get closer to civilian pay. It won't ever be equal, but don't let that stop you from trying to get closer. The American taxpayers have invested too much in a 12-year pilot to waste it over a silly $10,000 or even $60,000 a year cut in the bonus program. (But the 1992-level numbers are still insulting.)

If they really want to boost retention, the bonus needs to offer $50,000 or $70,000 a year. We already paid RAND to study this. They also need to open the bonus window earlier to lock in some experienced pilots at the 8 or 9-year point.

Should I take some upfront or spread it out?

Almost anytime you can get a lump sum payment instead of spread-out distributions, I recommend you take the lump sum. You definitely have to have a good plan and be disciplined so you don’t blow it all. Also, pay attention to your taxes.

DO NOT do this without a trusted advisor or friend helping you plan how you’ll use the big windfall, and always have a plan before the money actually hits your bank account to help avoid emotional decisions or wasteful spending. The Bogleheads forum has an excellent guide for managing a windfall.

When you choose to take control of the money upfront, you get the put the money to work for you and your goals like paying off debt (hopefully you’re not in debt at this point), saving for kid’s college or your next big investment property, etc. If you take it and simply invest it in a low-cost, easy index fund like Vanguard’s VTSAX, the money will grow for you immediately.

After 5 years in VTSAX, a $100,000 investment can grow to $140,255, assuming a 7% growth rate. If you take the lump sum amount and put it to work for you, it can be a great benefit.

I chose to take $100,000 upfront.

A few weeks after your contract effective date, you should get the direct deposit to your bank. Then starting on your contract anniversary date on year 2, you’ll get the remainder divided by the remaining years. Here’s how the payments worked in my situation (minus tax withholding):

Within a few weeks of 5/20/21	$100,000
5/20/22	$6,250
5/20/23	$6,250
5/20/24	$6,250
5/20/25	$6,250
Total Received:	$125,000

What are the tax implications of taking the pilot bonus?

Especially if you take the up-front amount, you should think about how an extra $100,000 or $200,000 this year will affect your taxable income and your tax bracket. I’m am currently in the 22% bracket, but with my 3 kids, I usually have a very low effective tax rate (~9%).

As soon as I decided to take the 5-year bonus, I immediately logged into MyPay and changed all my TSP contributions to traditional (vs Roth). Normally, I like Roth- paying taxes now and letting the money grow tax-free. But with a large income increase this year, I switched to traditional so the traditional contributions lower my taxable income this year. In the future, I will have to pay taxes on this money plus its growth when I take it out at retirement age.

I also immediately set my MyPay to send 30% of my bonus to my TSP. DFAS automatically won’t let you over-contribute to your TSP and will only send enough of the bonus to max out your TSP for the calendar year.

Brian O’Neill from Winged Wealth runs a great Facebook group for pilots. It’s called Fighter Pilot Finance but even the big boys are welcome to join if you can answer the questions in the group’s welcome page. He’s posted many times about taxes for the pilot bonus. We’ve also had him on our podcast on episode 89.

Can I get the bonus tax free if I am deployed?

If you sign your contract in a tax-free zone, a small portion of your first installment may be tax-free. You need to sign your bonus contract in a month when you receive CZTE (tax-free pay). As always, your tax-free benefits each month are limited to the amount of the Chief Master Sergeant of the Air Force’s base pay ($8,753 in 2021).

Let’s say you’re an O-4, and your base pay is $7,700 a month. If you fly into a combat zone the month you sign your contract, your base pay that month is fully tax-exempt. The bonus money you receive that month would only be tax-free for the [$8,753 – $7,700] difference of $1,053.

So it’s not going to move the needle for you to get the remaining $1,053 tax-free. Basically, cool if you happen to, but don’t go out of your way to be deployed when you sign.

If you’re in a tax-free zone on your contract anniversary date, none of your payout is tax-free. You only get a tax benefit when the contract is signed in a tax-free zone.

What should I do with the money?

Have a plan and use the extra money towards whatever your goals currently are. Avoid temptations to spend it all on an extravagant purchase or big vacation, but don’t be afraid to set aside a percentage of it for some fun.

The Bogleheads forum has an excellent guide for managing a windfall, and we recorded podcast episode 32 about how to manage a bonus or a large windfall.

I recommend having a standard percentage-based plan you will use for all windfalls. You decide this once, eliminate decision fatigue or emotional choices, and always do a similar thing with your tax refund or any other big payment you receive.

Maybe something like this:

• 10% donations- whether to your favorite charity or to a church, being generous is always a good start
• 5% vacation
• 5% thank your spouse or family for their help and support
• 20% max out your TSP for the year if you haven’t yet
• 12% max out your IRA (and your spouse’s, if applicable) if you haven’t yet
• 7% taxes. They will automatically withhold estimated taxes (currently 22%), but hopefully you’ll get a large portion of this back from the IRS
• 10% kid’s college fund
• 26% invest

Hopefully, this has been the most thorough and helpful explanation of the USAF pilot bonus you have ever seen. The pilot bonus can be an excellent springboard to financial independence, but the temptation of a lump sum payment is not enough to decide whether to stay on active duty or not.

Summary

Hopefully, this has been the most thorough and helpful explanation of the USAF pilot bonus you have ever seen. I wrote this because I couldn’t find easy answers when I was exploring options for myself.

The pilot bonus can be an excellent springboard to financial independence, but the temptation of a lump sum payment is not enough to decide whether to stay on active duty or not. Talk it over with your friends, family, trusted mentors, etc., but recognize this is a very individual and personal decision.

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