How BAH works in 2026: rates, rate protection and taxes

If you want to know how BAH works, start with three inputs: your permanent duty station's ZIP code, your pay grade, and whether you have dependents. That's it. DTMO's lookup tool asks for exactly those, and every other rule hangs off them.

The rest is detail, and some of it matters a lot when you're signing a lease.

What sets your BAH rate?

The ZIP code of your permanent duty station decides your military housing area, or MHA. DoD collects housing data for 299 of these areas across the U.S., including Alaska and Hawaii. Each one gets its own table of rates by pay grade, with and without dependents.

Where you choose to live doesn't enter into it. Rent a cheap place 40 minutes out and you keep the difference. Rent a big place close to the gate and you cover the gap.

Here's what 2026 rates look like for two common grades at a few big installations:

Installation	E-5 with dependents	E-5 without	O-3 with dependents	O-3 without
Fort Bragg/Pope, NC	$1,806	$1,527	$2,175	$1,956
Fort Hood, TX	$1,695	$1,530	$2,340	$1,833
Fort Campbell, KY	$1,815	$1,593	$2,496	$1,995
Norfolk/Portsmouth, VA	$2,430	$1,908	$2,694	$2,505
San Diego, CA	$3,975	$3,147	$4,518	$4,248

Same rank, same family situation, and San Diego pays more than twice what Fort Hood does. That's the local rental market showing through.

How does DoD calculate the rates?

The rates come from civilian housing costs near each base. DoD's 2026 announcement says median market rents and utilities (electricity, heat, and water and sewer) go into the numbers. Each housing area is priced across six housing profiles, sorted by type of home and number of bedrooms.

Then DoD takes a slice back on purpose. Rates are set so members pay about 5% of the national average housing cost for their grade out of pocket. In 2026 that works out to between $93 and $212 a month, depending on grade and dependents. DTMO is blunt about it: BAH "is not intended to cover all of a service member's housing costs."

DTMO also notes that rents usually move between 2% and 5% a year, so most annual changes are small. The 2026 rates rose an average of 4.2%.

What is BAH rate protection?

This is the rule that saves people in soft rental markets.

Individual rate protection means your BAH won't drop below last year's rate, even if the new table for your area goes down. It holds as long as your eligibility doesn't change. If rates go up, you get the higher number.

Three things end the protection: a permanent change of station, a reduction in pay grade, or a change in dependency status. Get married or divorced, and you move to the current table for your new status.

One side effect: two people at the same base, same rank, can draw different BAH. One arrived when rates were higher and kept them. The other got the current table.

Mid-year changes can also split rates. DTMO raised BAH for the Abilene/Dyess AFB area effective May 16, 2026. An E-5 with dependents there went from $1,554 to $1,872 a month.

When do new rates come out?

DoD announces new rates in December and they take effect January 1. The 2026 tables were released December 11, 2025. DTMO's guidance is that members are entitled to the rates published January 1, subject to rate protection.

That timing matters for PCS season. If you're moving in summer, the rate at your new base is whatever that year's table says, and protection starts fresh from there.

Is BAH taxable?

No. IRS Publication 3 lists BAH under living allowances that are excluded from gross income. It won't show up as taxable wages, which makes a dollar of BAH worth more than a dollar of base pay.

Check your own number

Put your duty station ZIP into the BAH calculator to see your rate. You can also browse every 2026 BAH location by state. Weighing two assignments? Compare both areas before you start house hunting.