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BAH - Basic Allowance for Housing
The Department of Defense planned increase in housing allowance funds for 2008 is about $600 million above the 2007 amount. That translates to an average housing allowance increase of 7.3 percent for military members when the new rates take effect Jan. 1, 2008. The BAH computation includes these three components:
To determine BAH rates, total housing costs are calculated for six housing profiles (based on dwelling type and number of bedrooms) in each military housing area. BAH rates are then calculated for each pay grade, both with and without dependents. An estimated $17.5 billion in BAH funds will be paid to more than 1,200,000 service members in 2008. For service members with dependents, average increases in BAH will be approximately $83 per month. A typical E-4 with dependents, for example, will find his/her BAH about $63 per month higher than last year, while an E-8 with dependents will receive about $79 more than last year. An integral part of the BAH program is the provision of individual rate protection to all members. No matter what happens to measured housing costs, an individual member in a given location will never see his/her BAH rate decrease. This assures that members who have made long-term commitments in the form of a lease or mortgage are not penalized if the area's housing costs decrease. For the current BAH rate for your location and your pay grade, go to this Defense Department calculator. 
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Basic Allowance for Housing - BAH - is the component of your military pay designed to adjust your income based upon the cost of housing in your current military duty location. This allowance, which you receive in addition to your basic pay if you do not live in government-furnished housing, is non-taxable.
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