The Basic Allowance for Housing (BAH) paid to a million service members living off base in the U.S. will rise by an average of 2.55 percent in January as a fifth and final annual step to dampen allowance calculations takes effect.
Actual BAH increases next month for individuals will vary based on where they are assigned, their specific paygrade or rank, and whether they are single or have family dependents.
Since 2015, DoD has trimmed BAH increases by 1 percentage point annually with the goal that by 2019 housing allowances would cover only 95 percent of local rent and utility costs, leaving service members responsible for paying 5 percent out-of-pocket. The purpose of the rate-dampening scheme was to hold down personnel cost growth by targeting the $21 billion BAH program.
Defense officials said in a press release announcing new rates that out-of-pocket amounts reflected in 2019 BAH rates will range $66 to $149 per month, amounts they described as “fair, responsible and sustainable,” keeping overall military pay and benefits “robust and healthy.”
New rates are online: https://www.defensetravel.dod.mil/site/bahCalc.cfm. (Editor's note: Some browsers may have trouble accessing the link because of security-certificate concerns.)
Military folks don't pay taxes on their housing allowance. As previously announced, taxable military basic pay will climb on Jan. 1 by 2.6 percent.
BAH rates are reset annually based on housing cost data (rent and utilities) collected for more than 300 military housing areas in the U.S., including Alaska and Hawaii. Costs are surveyed for six housing profiles -- a combination of dwelling type (apartments, townhouses, single-family homes) and number of bedrooms. Individual rates reflect local median market rents and average utility costs for the type of housing deemed appropriate for a member based on rank and dependency status.
Economic consulting firm Robert D. Niehaus Inc. collects nationwide cost data for six different housing types and bedroom numbers in every military housing area. Additionally, local military housing offices provide rental cost information for adequate and available properties in their communities. Cost surveys won't include neighborhoods identified by census tract data or military housing offices as inadequate. Utility costs are calculated using other survey data of what civilians in each housing area and housing profile are spending on utilities.
DoD this year did not release data on how many housing areas report BAH declines because local rental costs have fallen. But where that occurs, a rate protection rule ensures that no current BAH recipients will see allowances cut in the new year unless they move to a new locale or are demoted in rank, or their dependency status changes through divorce, separation, or death.
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