The IRS has confirmed that supplemental housing payments issued to members of the uniformed services in December 2025 are not subject to federal income tax. These payments, classified as “qualified military benefits,” are excluded from gross income under existing tax law. In a joint announcement with the Treasury Department, the IRS clarified that the one-time $1,776 payments, dubbed the “Warrior Dividend,” were made pursuant to a $2.9 billion appropriation under the One, Big, Beautiful Bill enacted in July 2025.
The payments were distributed to approximately 1,450,000 active-duty and eligible Reserve Component members in the Army, Navy, Air Force, Marine Corps and Space Force, in pay grades O-6 and below, as of November 30, 2025. The IRS emphasized that both regular and supplemental Basic Allowance for Housing (BAH) payments are qualified military benefits and thus excluded from taxable income. No changes to filing or reporting requirements were announced.
