New BAH Housing Allowance Increase For Military
How it works? – Eligibility
The rationale behind the BAH is to give members of the military an indemnity for their services to the State so that they can provide housing for themselves and their dependents (spouse or children). This kind of allowance is not subjected to taxation and it is granted on the bases of some crucial factors:
Marital status: it is mandatory to produce marriage documentationPay grade: It can be defined on the rank. Bah will be higher for higher ranksLocation in the USA: the benefits are granted in relation to local rent rates on the marketplace or, depending on the assignment, it could be determined by where the dependents actually live Dependents: the BAH varies according to family size on the basis that a family would need more room than a single person.
How is it calculated?
The BAH calculation is made by the median current market rent and average utilities cost for the housing unit. This way, it is ensured that BAH rates are in accordance with the marketplace’s annual trends rather than the home purchase market, as these are different markets that fluctuate according to other factors.
To estimate BAH rates, the DoD:
1) Establishes the housing costs (rent cost + utilities)
- Computes a separate BAH rate for each different pay grade that reflects military ranks for members with or without dependents.
The increase
From January 2022 many service members saw an increase in their BAH by an average of 5.1% (fluctuating from 0.1% in Portland Oregon, to 21.1% at Twentynine Palms, California as per military data). The DoD’s decision was likely due to current difficulties for military members who moved to new duty stations finding affordable and suitable housing as a result of cost increases across the USA caused by the Covid 19 Pandemic. Similarly, others found their rent increased dramatically upon renewing their leases. It followed that the DoD took steps to quickly change the housing situation by providing financial relief ahead of January 1st 2022. Currently, service members can obtain the BAH housing allowance increase for military by applying for it and showing proof of increased expenses. However, the current increase may not even be enough. It was reported by Military.com that the Air Force is concerned that a significant increase in housing and subsistence allowance will not suffice against current inflation rates and it asked Congress to increase the allowance further for members facing bad financial insecurity.
Will BAH cover every cost?
Many wrongly believe that BAH has to cover every service member’s housing costs. However, the BAH regulations state that the allowance may cover no more than 80% of the rent and utilities’ costs. As a result, service members have at least 20% out-of-pocket expenses deducted from their allowance computation.
Is BAH based on the duty station or the place I live?
BAH’s aim is to compensate military members for housing costs related to their duty station. So, once the location is known, the BAH can be established irrespective of where the members choses to live. For example, members who decide to commute to less expensive areas, would still have a lower BAH rate, despite their commuting expenses being very high. While the BAH rate is calculated upon the location of the duty station, military members may choose to live wherever they want and these choices will not influence the calculation of rates.
What happens if I get promoted?
In cases where a member is stationed in a new location where the current BAH rate for that grade is lower than the previous BAH amount, those members will continue to receive the higher BAH amount.
The DoD temporarily allowed BAH housing allowance increase for military to assist easing the financial burden of rising housing costs that service members moving to new duty stations have to fae. The Department promptly assessed market changes across the USA and listed the most affected markets along with evaluating and implementing solutions for the military. The Department of Defence is committed to preserve and reinforce compensation and benefits that may provide military members with an appropriate and safe standard of living, so as to sustain a trained, experienced and prepared armed forces in all circumstances. As such, the BAH increase is a consequence of this ongoing commitment and it is likely to last in the coming years.
Check the Department of Defence website to learn more: https://www.defense.gov/News/Releases/Release/Article/2874398/dod-releases-2022-basic-allowance-for-housing-rates/
