The Department of Defense (DoD) announced new Basic Allowance for Housing (BAH) rates for 2023. Effective January 1, 2023, the BAH rates will increase by 12.1 percent. The DoD will pay approximately $26.8 billion will pay to an estimated one million members of the United States Armed Forces.
What’s New With the 2023 BAH Rates?
Over the past year, housing market conditions have undergone major shifts around the country. It is these shifts that are behind the increase in BAH rates. Despite the substantial increase in average BAH rates, market trends vary considerably in different rental markets. These differences in geographic market conditions are reflected in the 2023 BAH rates.
On October 1, 2022, the DoD authorized a temporary automatic BAH rate increase for 28 military housing markets nationwide. Those rates will expire as soon as the 2023 BAH rates come into effect on January 1, 2023. However, the difference between the 2023 rates and the automatically increased rates are marginal.
How Does the Department of Defense Calculate the BAH Rates 2023?
Every year, the DoD gathers data on rental housing for an estimated 300 military housing marketing nationwide, including Hawaii and Alaska. Several data sources play a role in the process of setting the BAH rate. They include:
- Bureau of Labor Statistics consumer price index
- United States Census Bureau survey data
- Industry-leading online rental listing websites
- Commercial subscription rental cost databases
- Local military installation housing offices
- Input from various branches of the military
These data sources enable the DoD to collect up-to-date, accurate and high-quality cost data. The BAH rates calculation factors in each military housing area’s total housing cost, which comprises average utilities (electricity, heat, plumbing) and the median current market rent.
In each military housing area, six housing profiles (based on the type of house and the number of bedrooms) determine the total housing costs. The DoD then calculates the BAH rate for each grade (factoring in dependents) based on the housing choices of civilians with incomes comparable to the pay grade grouping of each service member.
The BAH rates 2023 are a part of the generous compensation package the military provides. It still provides member cost-sharing at five percent of the average national housing cost factoring. However, the pay grade and dependency status determine the specific amount, which ranges from $82–$184 per month for the BAH 2023 rates. Nonetheless, the DoD continues to provide a healthy and competitive pay and benefits package in addition to the cost-sharing element.
Protecting the individual rates of all members is an essential part of the BAH program. As long as your BAH eligibility in a specific location remains uninterrupted, your BAH rate will never decrease even if the measured housing costs, such as out-of-pocket expense adjustment, decrease. Consequently, decreases in area housing costs don’t negatively impact members with contracts and leases.
Helping Members Achieve a Good Standard of Living
The DoD’s top priority is to preserve its members’ compensation and benefits to ensure they achieve a good and sustainable standard of living. Visit USMilitary to learn more about Basic Allowance for Housing for 2023.