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The “Warrior Dividend” payments of $1,776 made to military service members in December 2025 definitely won’t be subject to income taxes, the IRS confirmed.
In a joint statement with the Department of Treasury, the IRS explained that the payments technically supplemented service members’ Basic Allowance for Housing since the money came from $2.9 billion in supplemental BAH funds that Congress approved in the One Big, Beautiful Bill, enacted in July 2025.
The “supplemental basic allowance for housing payments made to members of the uniformed services in December 2025 are not to be included in income by those who received the payments; they are not taxable,” according to the joint statement.
Read More: Pentagon Uses Military Housing Funds for $1,776 “Warrior Dividend”
Because normal BAH payments represent a “qualified military benefit,” they aren’t taxable. Therefore, the Warrior Dividend payments aren’t, either, according to the two departments.
President Donald Trump announced in December that 1.45 million service members would receive the $1,776 payments, framing them as a holiday gift tied to the nation’s 250th anniversary. Defense Secretary Pete Hegseth directed the Pentagon to disburse the money as a one-time basic allowance for housing supplement.
“The resulting one-time supplemental payments of $1,776 made primarily to active-duty members of the uniformed services in the pay grades of O-6 and below and eligible Reserve Component members as of Nov. 30, 2025, of the Army, Air Force, Navy, Marine Corps and Space Force were funded by this appropriation,” according to the IRS statement.
The Warrior Dividend also won’t count toward retirement calculations. It’s a stand-alone, one-time payment appearing as a separate line item on Leave and Earnings Statements.
Read More: Military Spouses: Here’s What to Remember About Filing State Taxes
“We are sending every soldier $1,776. Think of that. And the checks are already on the way,” Trump said during a prime-time address from the White House in which he announced the payments. “Nobody deserves it more than our military.”
Income Tax Webinar Set for Feb. 18
The Military Officers Association of America is hosting a webinar titled “What’s New for the Upcoming Tax Season” from 3 to 4 p.m. Eastern time Feb 18. Those who can’t attend may register to receive a link to the recording.
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16 Comments
The article mentions that the Warrior Dividend payments were made to service members in the Army, Air Force, Navy, Marine Corps, and Space Force, but I wonder if there are any other branches or personnel who are eligible for these payments.
I’m glad that the IRS and the Department of Treasury have clarified the tax status of the Warrior Dividend payments, as this will help avoid any confusion or errors on tax returns.
The Military Officers Association of America’s webinar on ‘What’s New for the Upcoming Tax Season’ on Feb 18 could be really helpful for service members who have questions about the tax implications of the Warrior Dividend payments.
The fact that the Warrior Dividend payments are a one-time payment and won’t be recurring is a bit disappointing, as it would be great if our service members could receive more consistent support.
I’m skeptical about the timing of the Warrior Dividend payments, announced by President Donald Trump in December as a holiday gift, and wonder if it was a political move to boost his popularity among service members.
The $1,776 amount of the Warrior Dividend payments seems like a random number, but I suppose it’s a nod to the nation’s founding in 1776.
The joint statement from the IRS and the Department of Treasury is a great example of how government agencies can work together to provide clear guidance and support to our military personnel.
It’s good to know that the Warrior Dividend payments will appear as a separate line item on Leave and Earnings Statements, making it easier for service members to keep track of their finances.
I’m concerned that some service members might not be aware that the Warrior Dividend payments are not subject to income taxes, and might accidentally report them on their tax returns.
It’s interesting to note that the Warrior Dividend payments were funded by $2.9 billion in supplemental BAH funds approved by Congress in the One Big, Beautiful Bill, and that they won’t count toward retirement calculations.
I appreciate that the article provides additional resources, such as the Military.com website, for service members to get more information on military benefits and tax tips.
The IRS confirmation that the $1,776 ‘Warrior Dividend’ payments are not subject to income taxes is a huge relief for the 1.45 million service members who received them, especially considering they were framed as a holiday gift tied to the nation’s 250th anniversary.
I’m glad to hear that, my brother is one of the recipients and this will definitely help him with his finances.
The fact that the Warrior Dividend payments are not taxable because they technically supplement service members’ Basic Allowance for Housing is a great example of how the government is supporting our military personnel.
I’m curious to know how the Pentagon decided to disburse the $1,776 payments as a one-time basic allowance for housing supplement, and what criteria they used to determine eligibility.
According to the article, the payments were made primarily to active-duty members of the uniformed services in the pay grades of O-6 and below and eligible Reserve Component members as of Nov. 30, 2025.