The 2023 Basic Allowance for Housing, or BAH, rates for military service members will increase by an unusually large average of 12.1% thanks to soaring housing costs nationwide, though some troops have already begun to receive their new amounts thanks to a temporary bump this year.
The Pentagon announced the 2023 BAH rates Dec. 14, 2022.
Rates will go up, on average, in 291 of the 300 military housing areas (MHAs) in the U.S., stay the same in four, and go down in five with the start of the new calendar year. The Defense Department estimated that it will pay about 1 million service members a total of $26.8 billion in BAH in 2023.
The "significant increase" in average rates reflects "unique market conditions experienced across many locations nationwide over the past year," DoD spokesperson Maj. Charlie Dietz said in a statement. "While average BAH rates increased substantially, different rental markets experience different market trends, and the 2023 BAH rates reflect those geographic market condition differences."
The handful of locations where rates fell include Lake Charles, Louisiana, by 10%; Alamogordo, New Mexico, by 4%; Long Island, New York, and Enid, Oklahoma, by 2%; and Buffalo, New York, by 1%.
Twenty-eight MHAs received temporary BAH increases Oct. 1, 2022, as part of an effort announced by the DoD to reduce troops' financial burdens amidst soaring inflation. The new rates in those areas will remain largely unchanged from the temporary boosts, Dietz said.
That's a shift from 2022's rates, which went down in some areas after a temporary 2021 boost ended.
The DoD calculates BAH rates based on a uniformed service member's geographic duty location, paygrade and dependency status, along with housing costs in each local market. BAH is payable only when government quarters, such as barracks, are not provided or when a service member has dependents.
Each year, the department releases new BAH tables in mid-December for rates effective Jan. 1.
The increases in BAH come as service members anticipate their biggest military pay raise in decades, proposed in Congress' fiscal 2023 National Defense Authorization Act. Expected to pass this month, the plan provides a 4.6% raise. A separate measure proposed in the House of Representatives would have provided an inflation bonus of at least 2.4% for service members and Defense Department civilians making less than $45,000 in 2023 but did not appear in the final bill.
2023 BAH Rates
The 12.1% average increase from 2022 to 2023 represents another larger-than-normal increase. The 2022 increase of 5.1% was already up from 2.9% in 2021.
The department bases BAH on a combination of local costs for rent and utilities for various housing types. Any fluctuation of one or more of those factors affects BAH rates for that location.
Related: Learn more about BAH.
Individual Rate Protection
In locations where the BAH rate falls from one year to the next, service members already living there will have their BAH rate protected thanks to individual rate protection. The policy prevents the BAH rate from being lowered as long as the service member's status remains unchanged.
BAH Rates Below Actual Housing Cost
After a congressionally mandated change, BAH rates were slowly reduced over time to 5% below actual housing costs. That process was completed in 2019. The nearly one million troops who receive BAH will absorb $82 to $184 of their calculated housing costs monthly in 2023. Rates will continue to sit at 95% of actual costs going forward.
Related: How Is BAH Calculated?
BAH Does Not Cover Renter's Insurance
Another congressionally mandated change eliminated renter's insurance from the BAH calculation. That means troops are expected to pay out of pocket for such insurance. Privatized base housing companies also no longer provide that protection as part of on-base rental agreements.
Related: See your BAH rates
BAH and the GI Bill
The GI Bill Monthly Housing Allowance (MHA) is generally the same as the BAH for an E-5 with dependents. MHA is based on the ZIP code for the school a service member attends. Unlike the BAH, which changes Jan. 1 of every year, the GI Bill MHA rates change Aug. 1, the beginning of the academic year. Read more about the GI Bill MHA rates.
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This story was updated Dec. 23, 2022, to clarify that rates were changing "on average" in certain areas.
-- Amanda Miller can be reached at email@example.com.