Basic Allowance for Housing, or BAH, is nontaxable money paid on a monthly
basis to a sevice member to compensate the service member for the cost of off-base housing. BAH is based mainly on the cost of housing near the service member’s duty location and varies from location to location, depending on the cost of housing in the area. The more expensive the housing in the region, the higher the BAH.
In addition to the cost of housing near the sevice member’s duty location, the service member’s rank effects the amount of BAH the service member receives. The higher the rank, the higher the BAH. The amount of BAH is not affected by the actual amount a service member pays for rent.
There are generally 2 types of BAH—with dependents and without dependents. If a service member has dependents, the cost of housing will be higher and the BAH will be higher. A single person doesn’t need as much room as a family. Also, if a service member receives BAH at the “with dependent” rate, the number of dependents does not affect the amount of BAH. In other words, BAH for a service member with a spouse and 6 children will be the same as a service member with just a spouse.
Reservists who are activated are paid BAH whether or not they live in military housing, because a reservist often has a mortgage or other civilian housing obligation. Also, veterans taking advantage of the Post 9-11 GI Bill and are enrolled as a full-time student are given BAH at the “with dependent” rate for the equivalent of an E-5, even if they do not have dependents.
It is often possible to find housing for less than the BAH and keep the extra money, which is tax free. This results in a higher actual disposable income. Other service members will find housing that changes more than the BAH and will make up the difference. In Tennessee, BAH is included as income for child support purposes, often resulting in the service member who receives BAH paying more child support.