Basic Allowance for Housing (BAH) provides uniformed Service members equitable housing compensation based on housing costs in local civilian housing markets within the United States when government quarters are not provided. The 2019 BAH rates took effect January 1, 2019 with an increase of an average of 3.8 percent. The updated BAH Rates are the largest average increase in four years according to defense officials. However, despite the overall average increase, approximately one in five locations will see a rate decrease. Members with dependents are seeing an average increase in BAH of approximately $60 per month. Veterans and their families using the Post-9/11 GI Bill are also seeing an average increase in their housing benefit, which is based on the BAH rate for an E-5 with dependents.
In areas where rates have decreased, the decrease applies only to members newly reporting to those locations. Members are protected by individual rate protection which ensures that those already assigned to a given location will not see their BAH rate decrease, however, they will receive the increase if the rate goes up. This assures that members who have made long-term commitments in the form of a lease or contract are not penalized if the area’s housing costs decrease.
Three components are included in the BAH computation: median current market rent; average utilities (including electricity, heat, and water/sewer) and average renter’s insurance.
Total housing costs are calculated for six housing profiles (based on dwelling type and number of bedrooms) in each military housing area. Basic Allowance for Housing rates are then calculated for each pay grade, both with and without dependents.
BAH enables Service members to live off-base comparably to their civilian counterparts, but it is not designed to cover all housing costs for all members. Actual expenses may be higher or lower based on a member’s choice of housing and where they live. Because members are free to make housing choices that best suit their needs, a member may choose to use all their housing allowance to rent for more expensive housing close to the duty station, or have a longer commute for either a larger or less expensive house in an outlying area.
BAH is an allowance, and is therefore not subject to income taxes.
Frequently Asked Questions
Who is eligible for BAH? A member assigned to permanent duty within the 50 United States, who is not furnished government housing, is eligible for a Basic Allowance for Housing (BAH), based on the member's rank, dependency status, and permanent duty station ZIP Code. A member stationed overseas (except in Hawaii and Alaska), including U.S. territories and possessions, who is not furnished government housing, is eligible for an Overseas Housing Allowance (OHA) based on the member's dependency status. If a member with dependents (except for a member paying child support) is serving an UNACCOMPANIED overseas tour, the member is eligible for BAH at the "with-dependent" rate, based on the dependent's U.S. residence ZIP Code, plus FSH at the OCONUS PDS, if the member is not provided government housing overseas.
I looked up the current year BAH amount for my grade and ZIP Code and it's less than I was getting last year. Am I going to lose money? No. BAH rate protection keeps an individual from having a reduction in BAH as long as the individual maintains "uninterrupted eligibility" for BAH. This means an individual is authorized the 1 January rate for the individual's grade and location or the housing allowance being paid on 31 December of the previous year, whichever is larger.
Can I ever lose rate protection? Three separate circumstances may lead to a change in your status that "interrupts your eligibility" for the allowance, and then, only if the published allowance for your grade and location is less than what you are getting now.First, and most common, a decrease occurs when you PCS to a location at which the housing cost is less than at your current duty station. At the new duty station you get a lower housing allowance, but you should be no worse off, because the allowance is driven by the housing costs there. Second, if you are demoted, your housing allowance reverts to the then-current published table of allowances for your lower grade. Promotions do not lower your housing allowance. Third, if your dependency status changes (from with-dependent to without-dependent, or vice versa), your housing allowance is determined by your new dependency status and the then-current published table of allowances for your grade.
If, in a given year, I lose rate protection, am I protected from further decreases in the following year(s)? Yes. An individual is authorized the larger of: (a) the January 1 published BAH for grade and location; or (b) the housing allowance being paid on December 31.
Does rate protection keep me from getting rate increases? No. An individual is authorized the larger of: (a) the January 1 published BAH for grade and location; or (b) the housing allowance being paid on December 31.
If I get promoted, do I get the "protected" BAH amount for my new pay grade? No. If you are promoted, your BAH rate is the then-current published BAH for your new (higher) grade, with the following exception. If you get promoted, and are in a location where the current published BAH for your new grade is lower than the BAH amount you were receiving before, you continue to receive the higher BAH amount.
Will I see big changes in housing allowances on January 1? Typically changes in housing allowances are modest. Allowances reflect the costs associated with household rental. Generally, rental prices change between 2%-5 percent from year to year, with "hot" markets changing 5%-10%. Housing allowances typically change accordingly.
I still have some out-of-pocket expenses! Yes, some members at a location may have out-of-pocket expenses. BAH rates are set at the median for each grade and housing profile. For a given individual, an out-of-pocket expense may be incurred based on the actual housing choice. If a member rents above the median rate for the grade/profile, that member incurs out-of-pocket expenses. For example, if a member lives in a 3-bedroom townhouse with lease and utilities that cost $1,200, and the median cost for that dwelling in the area is $1,100 that member has out-of-pocket expenses of $100. The opposite is true for an individual who chooses to occupy a less expensive residence. Only a member whose housing costs are exactly at or below the median will have no out-of-pocket expenses.
The BAH for my grade doesn't begin to cover my mortgage payment! BAH is based on rental data. A homeowner's monthly mortgage payment is not used in the computation because the monthly cash outlay of a homeowner is not a good indicator of the economic costs of home ownership. The variables needed to compute this include such difficult to measure factors as the expected appreciation in the value of the residence, the amount of down payment, the opportunity costs of interest from down payments, settlement costs, and the tax savings due to the interest and tax payments deduction. Therefore, BAH reflects the current rental market conditions not the historical circumstances surrounding various mortgage loans.
What is the source of BAH rental data? Current data is obtained from multiple sources, employing a "checks and balances" approach to ensure reliability and accuracy of data. Current residential vacancies, identified in local newspapers and real estate rental listings, are an important, but not our only, source of data. Vacancies are selected at random, and subjected to a multi-tiered screening process to ensure accuracy and reliability. Telephone interviews establish the availability and exact location of each residential unit sampled. The sample is designed to obtain a statistical confidence level of 95 percent or higher. Yellow page listings of apartments and real estate management companies are employed to identify units for rental pricing. It is also common to consult real estate professionals in a locality to obtain important confirmation and additional sources of data. When available, fort/post/base housing referral offices are contacted to tap local military expertise and gain insights into the local concerns of uniformed members. Finally, DoD and the Services conduct on-site evaluations at various locations to confirm and ensure reliability and accuracy of the cost data. Future enhancements include examining potential Internet uses as well as housing data available from other government agencies.
What is included in median housing costs? Current market rent, average utilities and renters insurance.
Does family size make a difference? No. Although BAH distinguishes between with-dependent and without-dependent, the with-dependent compensation is based on comparable civilians using average family size.
Why does someone living in another city get more BAH than I do, when it seems to me that housing is more expensive here? Accurately determining if one location has more expensive rental markets than another is a scientific and statistical exercise. Sometimes, individuals rely on limited personal experience or newspaper and magazine articles to make that judgment.
What is BAH-Diff? BAH-DIFF is the housing allowance amount for a member who is assigned to single-type quarters and who is authorized a BAH solely by reason of the member's payment of child support. A member is not authorized BAH-DIFF if the monthly rate of that child support is less than the BAH-DIFF amount. The BAH-DIFF amounts, originally calculated in 1997, are updated annually based on changes in the Basic Pay tables.
I am divorced with children, what is my BAH allowance? It depends on whether or not you have legal and physical custody of your children, pay child support, and/or live in single-type government quarters. If you have legal and physical custody of your children, then you are authorized BAH at the with-dependent rate if not assigned adequate family-type government quarters. If your former spouse has custody and you are paying adequate child support (at least in an amount of your BAH-DIFF rate) you are authorized BAH at the with-dependent rate if not in government quarters or BAH-DIFF if assigned single-type government quarters.
BAH is different for service members stationed overseas. A uniformed service member stationed outside the U.S., including U.S. territories and possessions, not furnished government housing, is eligible for Overseas Housing Allowance (OHA).