2016 Defense Budget

President Obama signed the defense budget which among other things sets 2016 military compensation and benefits. The military pay increase for fiscal year 2016 is 1.3%. General and flag officers, above pay grade O-7, will not see an increase due to a pay freeze at those higher levels.

See the latest update on the 2023 Defense Budget and the impact on 2023 military pay.

Highlights of the Defense Budget and Effect on Military and Veteran Benefits

1. 1.3% pay raise for 2016 compared to 1% the last two years and .8% less than the private-sector. 2.3% is the estimated private-sector wage growth which is based on the Employment Cost Index (ECI).
2. Congress has proposed limited pay raises over the next five year.
3. BAS (Basic Allowance for Subsistence) is projected to be 3.4%.
4. BAH (Basic Allowance for Housing) is projected to be increased 1.5% however BAH growth will also be slowed to achieve a 5 percent out-of-pocket cost by 2019.  BAH will drop 1% each from 2015 through 2019.
5. Consolidating Tricare options into a single plan with higher deductibles and co-pays.
6. Some co-pays or fees will increase for family members but not active duty servicemembers.
7. Tricare-for-life coverage for military retirees age 65 or older would have an annual enrollment or “participation fees”, current TFL beneficiaries would be grandfathered in.
8. Military retirees would pay slightly higher co-pays and medical fees.
9. Commissary subsidies would be reduced mostly by reducing days and hours the stores are open.

Links to the budget, overview and budget briefing transcripts can be found at www.budget.mil.

Time Line

February, 2015 – President Obama submits defense budget to Congress.

March, 2015– Congressional committees submit “views and estimates” of spending and revenues.

April –  June, 2015 – House & Senate Armed Appropriations Committees work on the FY2016 defense bill.

July – October, 2015 – House of Representatives and Senate pass their versions of the defense bill and negotiate differences.

Oct. 1st, 2015 – Senate passed the NDAA

October December, 2015 – Both Houses pass the final bill and President signs the NDAA into law.

Nov. 25, 2015 – President Obama passed the defense budget.

Historical Military Pay Raises by Year

Year	Military Pay Raise	Year	Military Pay Raise
2023	4.6%	1992	4.2%
2022	2.7%	1991	4.1%
2021	3%	1990	3.6%
2020	3.1%	1989	4.1%
2019	2.6%	1988	2%
2018	2.4%	1987	3%
2017	2.1%	1986	3%
2016	1.3%	1985	4%
2015	1%	1984	4%
2014	1%	1983	4%
2013	1.7%	1982	14.3%
2012	1.6%	1981	11.7%
2011	1.4%	1980	7%
2010	3.4%	1979	5.5%
2009	3.9%	1978	7.1%
2008	3.5%	1977	4.8%
2007 *	2.7%	1976	5.%
2006	3.1%	1975	5.52%
2005	3.5%	1974	6.2%
2004 *	4.2%	1973	6.7%
2003 *	4.7%	1972	7.2%
2002 *	6.9%	1971	7.9%
2001	4.1%	1970	8.1%
2000	6.2%	1969	12.6%
1999	3.6%	1968	6.8%
1998	2.8%	1967	5.6%
1997	3%	1966	3.2%
1996	2.4%	1965	E: 11% O: 6%
1995	2.6%	1964	2.5% - 8.5%
1994	2.2%	1963	12.6%
1993	3.7%	1962	None

* 2002, 2003, 2004, and 2007 are the average percentage raise as military pay raises differed for various military pay grades.

Military pay increases are for all branches of the U.S. Armed Forces; Air Force, Army, Coast Guard, Marines, Navy and Reserves forces where applicable.