The Defense Department announced the annual update Friday, and the new housing allowance rates will take effect on Jan. 1.
About a million service members a year receive BAH[2], either directly, to obtain their own housing, or indirectly as a payment to their installation's privatized housing operator. The Pentagon estimates that it will pay $29.2 billion in BAH payments in 2025, according to the announcement[3], up from the 2024 estimate of $27.9 billion.
The average increase of 5.4% is the same as 2024's average increase. In 2023, military households received a 12.1% average increase after costs had skyrocketed the prior year. The department didn't cite a prevailing reason for the 2025 increase, which tops any from 2010 to 2022.
The 2025 BAH increase also comes at the same time as a likely pay raise[5] for service members.
As of Friday, the House had approved a 4.5% increase in basic pay for all ranks, along with an additional 10% increase for junior enlisted troops in the paygrades of E-1 to E-4. A joint House and Senate committee had already compromised on the bill's language.
"Every single man and woman who serves in our armed forces[7] made the selfless decision to serve and protect our nation," House Armed Services Chairman Mike Rogers, R-Ala., said in a statement Wednesday about the pay raise and other provisions for troops in the annual defense policy bill. "It is vital that we ensure that our service members and their families are taken care of."
The proposed pay raise now requires the full Senate's approval and President Joe Biden's signature.
Meanwhile, any given household's BAH increase may not add up to the full 5.4% average, or it may be higher, depending on geographic differences in housing markets, which factor into the rates that vary from one area to the next. The rates in some areas might even go down, but in that instance, service members already living there get to keep their existing rate.
To try to base the rates on "high-quality, accurate, current-year housing cost data," the DoD compiles information from government departments, commercial subscription services that maintain databases of rates, publicly available websites, and installation managers such as housing officials.
The rates apply to 299 military housing areas in the continental U.S., Alaska and Hawaii. The factors evaluated to determine a rate for each rank in a given area include the rents of certain housing types and sizes, utility costs, and "the housing choices of civilians with comparable incomes," according to the announcement.
The calculation aims for the U.S. government to pay for 95% of service members' housing and for troops to make up the remaining 5%, amounting to about $90 to $202 per month out of pocket in 2025, depending on rank and whether the service member has dependents.
