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The Internal Revenue Service (IRS) delivered good news for America’s troops Friday, confirming that the one-time $1,776 “Warrior Dividend” paid to service members in December 2025 is completely tax-free, allowing troops to keep every dollar of the bonus.
In a Friday release, the Treasury Department and the IRS said that “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.”
The agency said federal tax law specifically excludes from gross income a “qualified military benefit,” adding that basic allowances for housing payments fall under that category and therefore are not subject to federal income taxes.
The confirmation caps off President Donald Trump’s pre-Christmas announcement that nearly 1.5 million U.S. service members would receive a special “Warrior Dividend” in recognition of their service and to commemorate roughly 250 years since the nation’s founding.
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President Donald Trump and Secretary of War Pete Hegseth listen during a Cabinet Meeting in the White House in Washington, D.C. (Andrew Caballero-Reynolds/AFP via Getty Images)
“And the checks are already on the way,” Trump said during a Dec. 17, 2025, primetime address from the White House, crediting tariffs and recently passed GOP spending and tax legislation for funding the payments.
“Nobody deserves it more than our military. And I say congratulations to everybody,” he added.
According to the IRS, Congress appropriated $2.9 billion in legislation enacted last July to supplement the basic allowance for housing payable to members of the uniformed services, with the one-time $1,776 payments funded by that appropriation.
The IRS said the supplemental payments were made primarily to active-duty service…
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