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The Internal Revenue Service (IRS) delivered good news to the US military on Friday, confirming that the one-time “Warrior Dividend” of $1,776 paid to service members in December 2025 is completely tax-free, allowing the military to keep every dollar of the bonus.
In a statement Friday, the Treasury Department and the IRS said the “supplementary basic housing allowance” made to members of the uniformed services in December 2025 “may not be included in the income of those who received the payments; they are not taxable.”
The agency said federal tax law excludes from gross income “qualified military benefits,” adding that basic housing allowances fall under that category and are therefore not subject to federal income tax.
The confirmation follows President Donald Trump’s pre-Christmas announcement that nearly 1.5 million US service members will receive a special “Warrior Dividend” to honor their service and commemorate the country’s nearly 250th anniversary.
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President Donald Trump and Secretary of Defense Pete Hegseth listen during a Cabinet meeting at the White House in Washington, DC. (Andrew Caballero-Reynolds/AFP via Getty Images)
“And the checks are on the way,” Trump said during a December 17, 2025 speech from the White House, including tariffs and the GOP’s recently passed spending and tax bill to subsidize payments.
“No one deserves more than our soldiers. And I say congratulations to everyone,” he added.
According to the IRS, Congress appropriated $2.9 billion in legislation passed last July to increase the basic housing allowance paid to service members in uniform, with one-time payments of $1,776 funded by that appropriation.
The IRS said the additional payments were made primarily to active duty service members in pay grades 6 and under, and eligible Reserve Component members as of Nov. 30, 2025, for all Army, Air Force, Navy, Marine Corps and Space Force.
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President Trump celebrates “reviving the warrior spirit” within the military during remarks, Sept. 30, at Marine Corps Base Quantico. (Jim Watson/Getty Images)
Pentagon press secretary Kingsley Wilson welcomed the tax administration in a statement to Pentagon News, saying that this decision ensures that the money reaches military families directly.
“The tax-free Warrior Dividend puts $1,776 directly into the hands of our soldiers and their families,” Wilson said. “The department is proud to see their sacrifice.”
During his December speech, Trump also touted what he described as a turnaround in the military under his leadership, citing record enrollment and comparing it to what he called historically poor employment numbers under previous administrations.
Secretary of the Army Pete Hegseth said the IRS news points to ‘what we are doing to rebuild our military.’ (Alex Wong/Getty Images)
“What a difference a year makes,” Trump said.
Defense Secretary Pete Hegseth said the budget reflects a broad push to improve the quality of life for military families.
“This Warrior Dividend serves as another example of how the Department of the Army is working to improve the quality of life for our soldiers and their families,” Hegseth said. “Everything we are doing is rebuilding our army.
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The Department of the Army and the Internal Revenue Service did not immediately respond to Fox News Digital’s request for additional comment.
Alec Schemmel of Fox News Digital contributed to this report.
