By THE ALASKA STORY
The Internal Revenue Service on Friday confirmed that the $1,776 “Warrior Dividend” paid to more than 1.5 million U.S. service members in late 2025 is exempt from federal income taxes.
In a press release issued Friday, the IRS stated that the supplemental payments—distributed in December at the direction of President Donald J. Trump—qualify as a tax-free military benefit under U.S. tax law.
“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 IRS said.
According to the agency, federal law excludes “qualified military benefits” from gross income. The Warrior Dividend falls under that designation, meaning recipients are not required to report the payment as taxable income and may keep the full amount.
Pentagon Press Secretary Kingsley Wilson said the clarification ensures the entire payment remains with service members and their families.
“The tax-free Warrior Dividend places $1,776 directly in the hands of our warfighters and their families,” Wilson said. “The department is proud to recognize their sacrifice.”
President Trump announced the dividend on Dec. 17, 2025, stating that nearly 1.5 million active-duty and reserve service members would receive the bonus both as a show of appreciation and to mark the 250th anniversary of the United States military.
“Nobody deserves it more than our military,” Trump said at the time. “I say, ‘congratulations’ to everybody.”
In a related statement, Secretary of War Pete Hegseth said the dividend reflects a broader effort to prioritize military readiness and family stability.
“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.”
The IRS guidance removes any uncertainty for service members preparing their 2025 tax filings, confirming the dividend will not reduce refunds or increase tax liability.
