Cost of Living Allowance [COLA] Law and Legal Definition

Cost of Living Allowance (COLA) refers to an addition to normal salary to cover increases in the cost of living. In the U.S., COLA is a military entitlement given to those military servicemen and women, who are living in high cost areas or stationed overseas. It is fixed on the basis of a service member’s pay grade, years of service, and number of dependents.