The Territorial Cost–of–Living Allowance (TCOLA) is an amount given to government employees stationed in specific high-cost areas (e.g., postal employees).
It is generally not taxable (not considered part of your gross income for federal income tax purposes); however, any overtime pay calculated on top of your base salary, including the TCOLA portion, would be taxable.
Did you receive a tax form with an amount on it?
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