Basic Allowance for Housing rates will increase by an average of 2.9 percent in January, defense officials announced today.
The 2.9 percent increase in BAH is across the spectrum, and doesn’t guarantee that everybody will see that increase — or any increase. But if the BAH rate decreases in a particular area, service members already living there won’t see their BAH decrease, so that those who have made long-term commitments with leases won’t be penalized. Service members can calculate their new rates by visiting DoD’s Basic Allowance for Housing calculator.
DoD estimates that about $23 billion in BAH will be paid to about 1 million service members in 2021. That’s up from the $22 billion estimate for 2020.
BAH rates vary depending on housing cost data collected each year for more than 300 military housing areas in the U.S., including Alaska and Hawaii. BAH also varies by paygrade and whether the service member has dependents.
The services and local military housing offices help in the collection effort, with local commands providing input that’s used to determine the neighborhoods where data is collected, helping to direct the collection effort to adequate apartment complexes and individual housing units.
In determining the BAH, officials factor in the median current market rent and average utilities of an area into the total housing cost. These total housing costs are computed for six types of housing based on the type of house and number of bedrooms in each area. BAH rates are calculated for each paygrade, both with and without dependents.
Consistent with the authority given by Congress in 2016, the BAH is no longer designed to cover 100 percent of the housing costs in an area. The service member’s out-of-pocket cost share is now calculated to be about 5 percent of the actual cost of rent and utilities. DoD estimates that the out-of-pocket rates incorporated into the 2021 BAH rates range are from $70 to $158 monthly, and vary by pay grade and whether or not the service member has dependents. Those out-of-pocket averages are rising compared to 2020 BAH rates, where out-of-pocket expenses vary from $68 to $148 monthly.
Again, these are averages, and service members’ costs vary depending on the type of house they rent. If service members live in privatized housing, their rent is equal to the BAH amount.