Military Pay Raise: How Much Can You Expect in 2025

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Military pay raises are annual increases in the basic pay portion of total compensation for service members across all branches: Army, Navy, Air Force, Space Force, Coast Guard, and Marine Corps. These raises help military salaries stay competitive with private-sector wages.

For 2025, Congress passed the National Defense Authorization Act (NDAA) in December 2024, and President Biden signed it into law. The NDAA confirmed a new military pay raise for active-duty service members and reservists beginning January 1, 2025.

The bill confirmed the largest raise in military pay in decades. The veteran Cost-of-living Adjustments (COLA) and allowances like BAH and BAS were also updated for 2025.

Keep reading to learn about how military pay raises are determined, the 2025 pay increase details, and how it affects service members and veterans.

What Is a Military Pay Raise?

You’ll often hear the phrase military pay raise in connection with compensation in the armed forces. A military pay raise is the annual increase in the basic pay portion of a service member’s total compensation. Basic pay is automatically adjusted at the start of each calendar year based on economic conditions and legislation.

Each year, military pay is tied to the Employment Cost Index (ECI), which tracks private-sector wage growth. If the ECI shows positive growth, military pay typically rises. In cases of deflation, basic pay remains unchanged from the prior year.

“Military pay will very rarely, if ever, come down when compared to the prior year,” says Brad Reichert, founder and managing director of Reichert Asset Management LLC. “In fact, every year since 1794, basic pay has either increased or stayed flat compared to the previous year. This consistency applies to nominal pay, not necessarily to real (inflation-adjusted) compensation, which hasn’t always kept pace with broader U.S. inflation over time.”

Enacted in 1962, Title 37 of the United States Code governs how military pay adjustments are calculated. Congress or the President can propose alternative raises through the National Defense Authorization Act (NDAA) process.

How are Military Pay Raises Determined?

Military pay raises are determined based on the Employment Cost Index (ECI), which measures year-over-year changes in wages for private-sector workers. The Bureau of Labor Statistics releases updated ECI data each quarter, and the October report is typically used to guide pay raise decisions for the upcoming year.

From 2000 to 2006, military pay raises were set at ECI +0.5%. After 2006, under the National Defense Authorization Act (NDAA), the standard pay raise is equal to the ECI. Congress or the President can specify an alternative pay raise that supersedes this automatic adjustment.

In addition to basic pay, lawmakers may approve increases to other forms of compensation, such as Basic Allowance for Housing (BAH), Basic Allowance for Subsistence (BAS), or special duty pay.

What Is the Military Pay Raise for 2025?

In December 2023, Congress passed the 2024 National Defense Authorization Act (NDAA), and it was signed into law by President Biden. The Department of Defense has proposed a 4.5% basic pay raise for active-duty military personnel and reservists as part of its 2025 budget request, effective January 1, 2025.

This annual increase helps ensure that military salaries continue to stay competitive with private-sector wages and accounts for cost-of-living adjustments. While the 2025 pay raise is lower than the 5.2% increase implemented in 2024, it still exceeds the 10-year average of roughly 3.3%

Basic Pay Raise for 2025

The basic pay raise for 2025 is 4.5%, following the annual adjustment guidelines tied to the Employment Cost Index (ECI). Although it is not as high as the 2024 raise, the 2025 increase still exceeds the long-term average and reflects efforts to keep military compensation aligned with economic conditions.

This pay increase applies to all branches of the armed forces, including active-duty personnel and reservists. It was included in the 2025 budget proposal and approved as part of the signed NDAA legislation.

BAH and BAS Rates for 2025

The Basic Allowance for Subsistence (BAS) helps active-duty service members cover the cost of meals. This allowance is not intended to cover meals for dependents and is paid regardless of whether meals are consumed at home, in the field, or on base.

In 2025, BAS rates increased by 1.9% compared to 2024:

The Basic Allowance for Housing (BAH) helps offset housing costs for service members who live off base. For 2025, BAH rates increased by an average of 5.4%, with rates adjusted to reflect current rental and utility costs in each Military Housing Area (MHA). Your individual rate depends on your duty station, pay grade, and whether you have dependents.

BAH rates are reviewed annually and vary based on local housing market trends. These updates help ensure service members can afford adequate housing without financial strain.

Military Veteran Pay Raise for 2025

Veterans and military retirees receiving VA disability compensation and pension payments received a 3.2% cost-of-living adjustment (COLA) effective January 1, 2025. This increase is tied to the Consumer Price Index (CPI) and is designed to help benefits keep pace with inflation.

A 3.2% COLA translates to an additional $32 per $1,000 in monthly veteran benefits, including VA disability payments, military retirement, and Survivor Benefit Plan (SBP) compensation.

Historical Data on Military Pay Raises

Military pay raises are typically linked to the Employment Cost Index (ECI), which tracks private-sector wage growth. While the ECI formula generally guides annual adjustments, Congress or the President can set different rates through the NDAA.

Here’s a breakdown of military pay raises from 2007 through 2025:

*Note: The April 2007 raise applied to targeted mid- and senior-grade warrant and enlisted officers.

Learn More About Military Compensation and Pay Structures

The 2024 military pay raise was the largest in two decades, marking a notable increase in basic pay since the 6.9% adjustment in 2002. These annual raises are designed to keep Military Compensation aligned with private-sector wages while recognizing the ongoing sacrifices of service members and their families.

Beyond basic pay, military members may receive a variety of allowances and benefits. Exploring the E4 base pay grade and reviewing updated military pay tables on the Department of Defense’s Military Compensation website can provide a clearer picture of expected earnings.

For details tailored to each service branch, take a look at our guides on Air Force Pay and Marine Corps Salary Pay to better understand how changes in military pay may affect total compensation.

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