Service members see a 12% boost in housing allowance

Members of the military will get a big hike in how much they get paid for housing expenses next year. Basic Allowance for Housing (BAH) rates will go up an average of 12.1% starting in January. A combination of inflation and price hikes specific to the housing market drove the need for higher rates, the Department of Defense said.

With the increase, the department will pay out an estimated $26.8 billion in allowances to about a million service members. DoD authorized a temporary automatic increase in BAH rates for 28 military housing areas nationwide that started on Oct. 1 and will expire on Dec. 31. Those areas, lead by California military bases, saw average rental prices go up by more than 20%. Those areas that already got a temporary BAH raise will stay at about the same levels with the new overall raise for 2023.

The new numbers mark a big change from the 2022 rate hike of 5.1%. DoD collects data on the rental housing market from 300 different military housing areas across the country, including Alaska and Hawaii. The process for setting the BAH rates relies on a number of sources including data from the Census Bureau survey and the Bureau of Labor Statistics consumer price index.

The housing allowance cost is a computation of average rent cost and utilities for a given area. It takes into account different types of houses, and then the rates are calculated for each pay grade both with and without dependents based on housing for civilians with comparable incomes.

DoD has a website where service members can calculate what their payments will be. For example, E-4 with dependents near Marine Corps Air Ground Combat Center in Twentynine Palms, California would get a BAH monthly payment of $1,974 in 2023 compared with $1,371 in 2022. Once a BAH rate is set, it doesn’t go back down, so that service members locked into a lease don’t suddenly get less money.

Real estate research firms show varying rates in inflation for 2022. Credit Karma reported an average rent increase across the U.S. of 14%, while apartmentlist.com reported increases in apartment rental rates at 4.7% from January to November 2022.

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