Basic Allowance for Housing - BAH - is the component of your military pay designed to adjust your income based upon the cost of housing in your current military duty location. It is based on the median rental costs in the local area.
This allowance, which you receive in addition to your basic pay if you are eligible and do not live in government-furnished housing, is non-taxable. There are different rates for those with dependents and without.
The BAH computation includes these three components:
Median current market rent
Average utilities (including electricity, heat, and water/sewer)
Average renter's insurance
To determine BAH rates, total housing costs are calculated for six housing profiles (based on dwelling type and number of bedrooms) in each military housing area. BAH rates are then calculated for each pay grade, both with and without dependents.
An integral part of the BAH program is the provision of individual rate protection to all members. No matter what happens to measured housing costs, an individual member in a given location will never see his/her BAH rate decrease. This assures that members who have made long-term commitments in the form of a lease or mortgage are not penalized if the area's housing costs decrease.
DoD expenditures for BAH in 2008 were estimated to be $17.5 billion, paid to more than 1,200,000 service members.
For service members with dependents, average increases in BAH for 2008 were approximately $83 per month. A typical E-4 with dependents, for example, found his/her BAH about $63 per month higher than 2007, while an E-8 with dependents received about $79 more than 2007.
For the current BAH rate for your location and your pay grade, go to this Defense Department calculator, type in your duty zip code, and select your pay grade.
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