The Treasury and the IRS confirmed that special housing-related payments made to service members in December 2025 are not taxable and should not be included in income.
The one-time payments stem from a $2.9 billion congressional appropriation approved last summer to supplement the military’s basic allowance for housing.
About 1.45 million eligible active-duty and reserve service members received $1,776 payments announced by President Trump as a pre-Christmas “Warrior Dividend.”
The Department of the Treasury and the Internal Revenue Service have clarified that supplemental housing payments issued to members of the uniformed services in December 2025 are exempt from federal income tax.
The payments were authorized under the “One, Big, Beautiful Bill,” enacted by Congress in July, which set aside $2.9 billion to boost the basic allowance for housing (BAH) paid to military personnel. In December, President Trump announced that roughly 1.45 million service members would receive a one-time payment ahead of the holidays, calling it a “Warrior Dividend.”
Eligible recipients received $1,776 payments funded by the congressional appropriation. The payments were made primarily to active-duty members in pay grades O-6 and below, as well as qualifying Reserve Component members of the Army, Air Force, Navy, Marine Corps, and Space Force who were eligible as of Nov. 30, 2025.
Exempted from gross income
Treasury and IRS officials said the payments are excluded from gross income under existing federal tax law. The law specifically exempts “qualified military benefits” from taxation, a category that includes basic allowance for housing payments and related supplements.
As a result, service members who received the December payments do not need to report the funds as taxable income on their federal tax returns.