WASHINGTON — The Internal Revenue Service confirmed that the $1,776 "Warrior Dividend" more than 1.5 million service members received last year, at the direction of President Donald J. Trump, would be tax-free.
In a press release posted Jan. 16, the IRS confirmed the tax-free status of the dividend.
"The Department of the Treasury and the Internal Revenue Service today confirmed 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 statement reads.
According to the IRS, U.S. tax law excludes from gross income a "qualified military benefit." The Warrior Dividend is just such a benefit and is therefore not taxable. Service members will keep all of the dividend to use as they see fit.
"The tax-free Warrior Dividend places $1,776 directly in the hands of our warfighters and their families," said Pentagon Press Secretary Kingsley Wilson. "The department is proud to recognize their sacrifice."
On Dec. 17, 2025, the president announced that nearly 1.5 million service members would receive a $1,776 bonus to both thank them for their military service and to commemorate the 250 years the U.S. military has been defending the nation.
"Nobody deserves it more than our military," he said. "I say, 'congratulations' to everybody."
In a related statement, Secretary of War Pete Hegseth said the dividend illustrates the nation's commitment to military service members.
"This Warrior Dividend serves as yet another example of how the War Department is working to improve the quality of life for our military personnel and their families," Hegseth said. "All elements of what we're doing are to rebuild our military."
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