The 2018 Basic Allowance for Housing (BAH) rate increase is currently proposed at 2.9.% according to the President’s defense budget. The 2.9% increase would be effective on January 1, 2018 and servicemembers would see their first increase in their January 15th, 2018 pay.
The BAH rate increase will not become official and may be adjusted until the FY2018 National Defense Authorization Act aka the defense budgets is signed into law. Typically Congress and the President agree on a final version, and the President signs it into law in December.
The BAH program also includes a plan to slow growth, which will eventually achieve a 5% out-of-pocket cost for living expenses. For 2018, the rate will cover 96 percent of service members’ housing costs, a one percent drop from last year. BAH used to cover 99% of housing expenses but by 2019, service members will be paying 5% of their housing expenses out of pocket.
Not all locations will see an increase, as BAH is based on the duty station zip code, or school zip code in the case of veterans using the Post-9/11 GI Bill®, and thus corresponds with the cost of living of that zip code. For instance, cities with a very high cost of living such as Honolulu, Chicago, and Los Angeles have a very high BAH rate to help off-set those costs. Smaller cities such as Tacoma or Colorado Springs have a lower cost of living and therefore a lower BAH.
FY2012 – FY2018 Basic Allowance for Housing (BAH) Comparison
|Year||Proposed Increase/Decrease||Actual Increase|
BAH Changes Timeline
Defense Department began increasing housing allowance rates to bring them in line with actual rental market housing costs across the country and to reduce members’ out-of-pocket housing costs. Prior to this initiative, a military member’s housing allowance covered only about 80 percent of their full housing costs, leaving an out-of-pocket cost of up to 20 percent.
Housing allowance rates were increased enough so that the median out-of-pocket “off-base” housing cost was completely eliminated for members by pay grade, location, and dependency status. The Military Services also entered into numerous public-private ventures (PPVs) designed to eliminate inadequate government housing by leveraging private sector financing, expertise, and innovation to provide necessary housing faster and more efficiently than traditional Military Construction processes would allow.
Authorized the monthly Basic Allowance for Housing (BAH) rates to be set at 99 percent (vs. 100 percent) of the median rental housing costs.
Authorized monthly BAH rates to be set at 95 percent (vs. 99 percent) of the median rental housing costs; phased in 1.0 percent increments per year over 4 years.