BAH Reform: From 95% Back to 100% — What's Actually Changing
Since 2019, BAH has covered only 95% of estimated housing costs — service members absorb the other 5% out of pocket (about $93–$212 per month in 2026, depending on grade and location). Momentum is building in Washington to fix that, and real money has already moved.
Where things stand
- 2026 rates: BAH rose about 4.2% on average — a smaller bump than the 5.4% increases of 2024 and 2025 — and still covers 95% of calculated costs.
- $2.9 billion supplemental: the 2025 "One Big Beautiful Bill" reconciliation package included $2.9 billion in extra BAH funding — the first concrete step toward restoring the benefit toward 100%.
- FY2026 NDAA study: Congress ordered a study on improving how BAH is calculated so rates keep up with actual rental markets.
- Compensation review recommendations: the Pentagon's quadrennial compensation review recommended replacing the current BAH model with a more reliable one — including scrapping the six housing profiles in favor of a simpler bedroom-count standard.
Why the 5% matters
Five percent sounds small, but BAH is the second-largest piece of most paychecks. For an E-5 with dependents in a high-cost area, 5% of housing costs can be $150–$200+ every month — roughly an entire car payment over a year. Restoring 100% coverage is effectively a tax-free raise concentrated where housing is most expensive.
What it means for you right now
- Nothing changes automatically — 2026 rates remain at 95% cost coverage.
- If the reform advances, expect it through an NDAA or budget bill — watch the FY2027 NDAA.
- Your individual rate still depends on ZIP code, grade, and dependents — check yours on the BAH rates by location pages or in the calculator.
Look up your current BAH and full take-home pay by ZIP code.
Calculate my pay →Frequently asked questions
Why does BAH only cover 95% of housing costs?
A 2019 cost-saving change set BAH at 95% of estimated local housing costs, leaving members to absorb the remaining 5% — about $93–$212 per month in 2026.
Is BAH going back to 100%?
Not yet, but momentum is building: a $2.9 billion supplemental was funded in 2025, Congress ordered a study of the BAH formula, and the Pentagon's compensation review recommended a better model.
How much is the 5% out-of-pocket in dollars?
Between roughly $93 and $212 per month in 2026, depending on pay grade and location.