Effective Jan. 1, 2026: Basic Allowance for Housing will increase by an average of 4.2%, with the Pentagon estimating about $29.9 billion in payments for roughly 1 million service members. Rates vary across 299 military housing areas; members in areas with decreases will be held harmless and retain their 2025 BAH. Congress is pushing for greater transparency and a study of alternative calculation methods — including AI and commuting impacts — under a House-passed NDAA provision.
Pentagon Announces Average 4.2% BAH Increase for 2026 — What Service Members Need to Know
Service members will see a 4.2% bump, on average, in their monthly Basic Allowance for Housing as of Jan. 1, defense officials announced Thursday. (U.S. Army)
Defense officials announced that, effective Jan. 1, 2026, Basic Allowance for Housing (BAH) will increase by an average of 4.2% for service members. The Pentagon estimates it will pay about $29.9 billion in housing allowances for roughly 1 million service members in 2026.
How BAH Rates Are Set
Each year the Department of Defense collects rental and utility cost data for 299 U.S. military housing areas, including Alaska and Hawaii. Rates are calculated for every pay grade, both with and without dependents, using the housing choices of civilians with similar incomes as a benchmark. Officials use multiple data sources, including service-provided and local installation housing office data, commercial rental-cost databases, U.S. Census Bureau surveys, the Bureau of Labor Statistics Consumer Price Index, and online rental listings.
Local Variations And The Hold-Harmless Policy
BAH adjustments vary widely by location. Some military housing areas will see increases greater than the average, while others may see decreases. In locations where rates would fall, affected service members will not receive a lower BAH: they will be held harmless and continue to get the 2025 rate for as long as they remain stationed there.
Example
In Norfolk, Virginia, the DOD BAH calculator shows an E-5 with dependents would receive $2,430 per month in 2026 — a 4.5% increase ($105) over the $2,325 monthly rate in 2025. An O-1 without dependents in Norfolk would receive $2,022 per month in 2026, up $45 (2.2%) from 2025.
What Data Goes Into the Calculation
When setting rates, the department gathers information on rental prices and utilities such as electricity, heat and water/sewer. Costs are calculated across six housing profiles in each military housing area, based on dwelling type and bedroom count, to reflect common household needs.
Congressional Scrutiny And Proposed Changes
With questions raised in recent years about BAH calculations, Congress has pushed for greater transparency and exploration of alternatives. The House-passed fiscal 2026 National Defense Authorization Act would require the DOD to publish a clear, accessible explanation of how BAH rates are determined. The bill also directs the Pentagon to enter an agreement to study alternative rate-calculation methods — including the potential use of artificial intelligence and machine learning — and to review commuting times and housing affordability in at least 15 of the 299 housing areas. That study must be completed within three years of DOD entering the agreement.
Background And Context
Many service members have faced sharply higher housing costs in recent years. In 2023, the Pentagon implemented an average BAH increase of 12.1%, the largest year-over-year jump in at least 15 years. The Government Accountability Office has concluded the Pentagon needs to improve how it computes housing allowances; defense officials say they are reviewing those procedures.
What Service Members Should Do
Service members can look up their specific 2026 BAH rate by ZIP code and rank using the DOD BAH rate lookup tool. If you expect to move or have concerns about local affordability, check local housing offices and installation resources for counseling and guidance.
Bottom Line: Average BAH will rise modestly in 2026, but local changes vary — the Pentagon and Congress are pursuing more transparency and potential changes to the way rates are calculated.
