IRS Announces $1,776 ‘Warrior Dividend’ for Troops Is Tax-Free

The dividend was announced last month by President Donald Trump, who said it would be sent to 1.45 million service members before Christmas 2025.

The top of a form 1040 individual income tax return for 2005 at the Des Plaines Public Library in Des Plaines, Ill., on March 23, 2006. Tim Boyle/Getty Images

The IRS and the Pentagon said on Jan. 16 that a “warrior dividend” announced by the Trump administration in December 2025 for soldiers will not be taxed, affecting more than 1 million service members.

“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 in a statement.