Shelves of staple food items are stocked on Fort Jackson commissary shelves June 23. While contracted personnel stock the shelves, Fort Jackson, Mississippi, volunteers help keep shelves stocked throughout the day. (Alexandra Shea/Army)

New Basic Needs Allowance Could Become Tax-Free

Military households receiving the new Basic Needs Allowance aimed at reducing food insecurity may not have to pay taxes on the cash payments if a bipartisan bill makes it through Congress.

The Basic Needs Allowance, or BNA, began this year. The benefit is currently only for service members who have dependents and whose gross household income falls below 130% of the federal poverty level for their family size and location. To qualify, their income must have fallen below the threshold in both the previous calendar year and annualized for the current year.

The benefit received amounts to whatever sum will bring a household's income up to the 130% line.

The new bill would amend the Internal Revenue Code to define the BNA as a "qualified military benefit," meaning the payments would be exempt from taxation.

Reps. Steve Womack, R-Ark., and Dan Kildee, D-Mich., introduced the BNA Fairness Act in March, promoting it as a bipartisan bill. Republican Reps. Brad Wenstrup of Ohio, Doug Lamborn of Colorado, Rob Wittman of Virginia and Matt Gaetz of Florida are also listed on the bill.

Womack said in a statement that listing the BNA as a tax-free benefit "rightfully" treats it the same way as the Basic Allowance for Housing and Basic Allowance for Subsistence.

"Inflation is on the rise, staple food prices are elevated, and the financial stresses of deployments, transfers, and high military spouse unemployment all add up to a negative strain on [military families'] income," Womack said.

Inability to put enough food on the table consistently, known as "food insecurity," affected 24% of active-duty troops in the year prior to a 2020 Defense Department survey.

Womack said in the statement that taxing the BNA "undermines the mission. ... With reduced financial pressure at home, our troops can better focus on performance and defense."

The bill was referred to the House Committee on Ways and Means.

Meanwhile, more troops could become eligible to apply for the benefit -- you can't get it unless you apply -- this summer.

Defense Secretary Lloyd Austin told the Senate Armed Services Committee in March that the DoD plans to raise the income threshold to 150% of the federal poverty level in July, six months sooner than the 2023 National Defense Authorization Act requires it to do so.

All household income is considered when determining a service member's eligibility for the BNA. This includes income from all military pay and allowances, from other household members, investments, and any other household income.

More troops could also become eligible if the DoD decides to exclude the Basic Allowance for Housing from the income calculation for the BNA.

Editor's note: This story was updated to correctly attribute a statement to Womack.

By Amanda Miller