2024 Military BAH Rates: Housing Allowance Changes

The Department of Defense (DOD) has set an average 5.4 percent increase to the military Basic Allowance for Housing (BAH) for 2024.

Though this is, as the graph below shows, a healthy increase by historical standards, it’s significantly less than last year’s record 12.1 percent BAH increase. Why is that the case? Primarily because last year’s unprecedented increase was a catch-up in response to soaring rental rates across the country. Because rents in most areas of the country have finally begun to level off, this year’s increase is more in line with historic norms.

What is BAH?

BAH is an allowance to offset the cost of housing for service members who do not receive government-provided housing. By law, it’s meant to cover 95 percent of your housing costs, minus renters’ insurance. Rates are recalculated every year. If the rates go down where you are living, you will be grandfathered into the older, higher rate. If the rates go up where you are living, you'll receive the new, higher amount.

How is BAH calculated?

Your BAH depends upon your location, pay grade and whether you have dependents. BAH rates are calculated each year using median market rents and average local utility expenditures (electricity, water/sewer, and heating fuel) for civilians in each local market area. Therefore, BAH rates in high-cost areas will be much greater than those in low-cost areas.

BAH FAQs

Q: Do I have to pay taxes on my BAH?

A: According to the IRS, the Basic Allowance for Housing (BAH) can be excluded from gross income as a qualified military benefit. Excludable income will not be included in the amount on Form W-2, Box 1.

Q: Can service members use their BAH for mortgage payments?

A: Yes. Members are free to use their BAH as they choose. However, BAH should not be expected to cover home ownership expenses or track fluctuations in the home purchase market. BAH is targeted to local rental markets. 

Q: Does family size make a difference in the BAH rate a service member receives?

A: No. While BAH distinguishes between with-dependent and without-dependent status, the with-dependent compensation is based on comparable civilians using average family size. BAH rates do not increase with increases in the number of dependents.

Q: If both members of a married couple are in the military, does each receive BAH?

A: In general, dual military couples without dependents each receive single BAH. If the couple has children, one spouse can claim them and receive BAH with dependents. The other spouse would continue to receive single BAH.

Make the most of your robust military benefits

Between allowances like BAH and BAS, the opportunity to earn special pay and the robust set of benefits included in the Blended Retirement System (BRS), military members have a unique opportunity to position themselves for future financial security. First Command Financial Advisors, most of whom served themselves and are well acquainted with military pay and benefits, have been helping service members and military families make smart financial decisions and integrate their benefits into comprehensive financial plans since 1958. If you’re ready to get your financial future squared away, schedule a complimentary consultation with a local First Command Advisor today.

Want to learn more about the 2024 military pay raise? Click here.

First Command does not provide legal or tax advice, and this article does not contain any legal or tax advice. Should you require legal or tax advice specific to your situation, you should consult with an attorney or qualified tax advisor. The information provided to you herein is provided for informational purposes only, is not intended to be tax or legal advice, and should not be used for the purpose of avoiding tax-related penalties under the Internal Revenue Code.