DoD seeks to boost pay while cutting incentives, relocation funds in 2027

As the Pentagon seeks to significantly boost pay for service members in 2027, it is also looking to scale back funding for various incentives and permanent change of station moves.

The Defense Department is requesting about $192 billion for military personnel in fiscal 2027, up from roughly $185 billion enacted in fiscal 2026 and $176 billion in fiscal 2025, according to fiscal 2027 budget documents recently released by the Pentagon.

If approved by Congress, the Army’s military personnel budget would grow to about $74.5 billion in fiscal 2027, up from $72.5 billion in the current fiscal year and $69.8 billion in 2025. The Navy’s personnel funding would rise to approximately $65.7 billion, up from $63 billion in 2026 and $59.3 billion the year prior. The Air Force’s personnel budget would increase to about $50 billion in fiscal 2027 from nearly $48.5 billion in fiscal 2026.

The Space Force, however, could see the fastest growth in 2027, with the White House seeking about $1.83 billion for military personnel, up from $1.53 billion in 2026. That military personnel funding increase comes as the Space Force budget is expected to grow significantly. Under President Donald Trump’s proposed $1.5 trillion defense plan, the administration is requesting $71 billion for the newest military branch — a significant jump from roughly $40 billion in the current fiscal year.

The overall increase comes as the White House is proposing a tiered military pay raise — junior enlisted service members could receive a 7% pay raise, more senior enlisted members and officers through the rank of O-3 could see a 6% increase and officers in the ranks of O-4 and higher could receive a 5% raise.

Todd Harrison, senior fellow at the American Enterprise Institute, said the proposed military pay increase would be the largest above the Employment Cost Index since fiscal 1982.

“A higher than ECI pay raise would be appropriate if military compensation had fallen behind the private [sector] or if it was having recruiting or retention issues. Neither is true in this case. The risk here is that labor costs are ‘sticky.’ You are now stuck with higher military personnel costs in perpetuity, and any future pay raises will be compounded on top of this raise. The long-term cost of this will be enormous,” Harrison said on social media platform X.

Meanwhile, funding for permanent change of station moves could drop significantly in fiscal 2027. For the Army, for instance, total PCS travel spending could drop from about $2.3 billion in fiscal 2026 to roughly $1.99 billion in fiscal 2027.

The largest decrease comes from operational travel, which would fall from approximately $696 million in fiscal 2026 to $544 million in fiscal 2027, while training travel declines sharply from about $226 million to $124 million.

Temporary lodging funding could also see a significant decline, dropping from roughly $235 million to $51 million.

Similarly, the Navy seeks to reduce its travel-related costs — operational travel could fall from approximately $543 million to $414 million, while temporary lodging funding drops sharply from about $46 million to $15 million.

The Air Force’s travel-related costs, however, are projected to increase in fiscal 2027. The Defense Department is requesting $374 million for operational travel in fiscal 2027, up from about $327 million in fiscal 2026. Training and rotational training are also getting a boost. 

The Defense Department has been pushing to reduce the number of PCS moves, directing the military services to cut discretionary PCS spending by 10% in fiscal 2027, 30% by fiscal 2028 and 50% by 2030. 

“As we look across the department for efficiencies, the military departments must determine which PCS moves are most critical to support operational requirements and key professional development. Lower-priority PCS moves should be reduced for service members and their families seeking greater geographic stability,” Defense Secretary Pete Hegseth’s memo states. 

As for various incentives, the Army is proposing reductions across several compensation categories. Funding for enlisted special pays — including reenlistment bonuses, hazardous duty pay and other targeted bonuses — could drop from about $1.17 billion in fiscal 2026 to roughly $1.02 billion in fiscal 2027. Officer incentive pay would also decrease, falling from approximately $98.5 million to $85.2 million, while enlisted incentive pays could dip slightly from about $85.5 million to $82.3 million. Separation pay is also reduced, with enlisted funding decreasing from about $305 million to $288 million and officer separation pay dropping from roughly $71 million to $61.3 million.

The Navy, however, is moving in the opposite direction. Incentive pays for Navy officers could increase from roughly $181.8 million in fiscal 2026 to about $205.9 million in fiscal 2027, while enlisted incentive pays rise from approximately $113.9 million to $119.4 million.

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