The Department of Defense (DoD) has released the 2023 Basic Allowance for Housing (BAH) rates. Though the Coast Guard falls under the Department of Homeland Security (DHS), members receive BAH based on DoD allowances.
The new rates will take effect Jan. 1, 2023, and on average will increase 12.1%. An estimated $26.8 billion will be paid to approximately one million service members. The significant increase in average BAH rates reflects the unique housing market that many experience across locations nationwide over the past year. 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 temporary automatic BAH rate increases DoD authorized effective Oct. 1, for 28 military housing areas across the country will expire on Dec. 31, and will be replaced by 2023 BAH rates. There are only marginal changes between the automatic increase rates and the 2023 rates (most rates are unchanged).
How are BAH rates determined?
DoD collects rental housing cost data annually for approximately 300 military housing areas in the United States, including Alaska and Hawaii. The BAH rate-setting process relies on a wide variety of data sources to obtain high-quality, accurate, current-year housing cost data. Data sources include the U.S. Census Bureau survey data, Bureau of Labor Statistics Consumer Price Index, commercial subscription rental cost databases, industry-leading online rental listing websites, and input from the Services and local military installation housing offices, and others.
The current average rental market and average utilities (including electricity, heat, and water/sewer) make up the total housing cost for each military housing area and are included in the BAH computation. Total housing costs are determined 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, based on the housing choices of civilians with comparable incomes to each service member pay grade grouping.
BAH is not meant to cover the member’s entire housing and utility cost. Rather, it’s expected that members share that cost by contributing 5%, which will range from $82 to $184 monthly based on the 2023 BAH rates.
Though members may see a change in BAH rates, members who stay in the same area will not see their BAH decrease even if that rate for the location goes down. Members who have made long-term commitments in the form of a lease or contract are not penalized if the area's housing costs decrease.
For more information on the Basic Allowance for Housing, including the 2023 Basic Allowance for Housing rates and 2023 Basic Allowance for Housing rate component breakdown, visit the Defense Travel BAH website. To calculate your BAH payment, visit here.
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