For those service members living off-base, the amount of BAH paid depends upon the service member's rank, marital status and the local cost for housing. The congressional statute authorizing the BAH system currently limits monthly BAH payments to no more than 85 percent of the average local cost for housing. BAH is not taxed, so every dollar of BAH goes directly into the service member's pocket. Service members will benefit from improved quality of housing because of the positive effect that higher BAH will have on housing privatization efforts. In these programs, private developers provide and maintain housing for service members and their family members.
Privatization can provide new housing in areas where available housing is limited.
Improved BAH increases the income available to private sector developers, facilitating increases in the quantity and quality of privatized housing. Said Cohen, The military simply cannot afford to build, own and maintain enough quality housing to meet our needs. Adequate housing is a core military requirement. But building and maintaining housing is not a core military competency. It makes good sense to incentivize the private sector to provide the housing we need.