2025 Military Pay Raise: 4.5% Increase
Military service members received a 4.5% pay raise effective January 1, 2025, marking one of the largest increases in recent years. Additionally, junior enlisted members (E-1 through E-4) received an extra boost, bringing their total raise to approximately 14.5%. This article breaks down exactly what the pay raise means for your paycheck and how it affects your Leave and Earnings Statement (LES).
2025 Pay Raise Summary
| Category | Pay Increase | Effective Date |
|---|---|---|
| All Military Members | 4.5% | January 1, 2025 |
| Junior Enlisted (E-1 to E-4) | ~14.5% total | Spring 2025 |
| Basic Allowance for Subsistence | 1.7% | January 1, 2025 |
| BAH (varies by location) | 5.4% average | January 1, 2025 |
What This Means for Your Paycheck
Monthly Basic Pay Increase Examples
| Pay Grade | Years of Service | 2024 Monthly Pay | 2025 Monthly Pay | Increase |
|---|---|---|---|---|
| E-4 | 4 years | $2,961 | $3,094 | +$133 |
| E-5 | 6 years | $3,557 | $3,717 | +$160 |
| E-6 | 10 years | $4,207 | $4,396 | +$189 |
| E-7 | 14 years | $4,862 | $5,081 | +$219 |
| E-8 | 18 years | $5,627 | $5,880 | +$253 |
| O-3 | 6 years | $6,317 | $6,601 | +$284 |
| O-4 | 12 years | $7,891 | $8,246 | +$355 |
| O-5 | 18 years | $9,414 | $9,838 | +$424 |
Junior Enlisted Pay Boost
Recognizing recruitment and retention challenges, Congress approved an additional pay increase for junior enlisted members. The combined 14.5% raise for E-1 through E-4 is designed to:
- Improve quality of life for the most financially vulnerable service members
- Better compete with civilian entry-level wages
- Reduce reliance on food assistance programs
- Improve recruiting and first-term retention
Junior Enlisted Before and After
| Pay Grade | 2024 Monthly Pay | 2025 Monthly Pay (with boost) | Total Increase |
|---|---|---|---|
| E-1 (less than 4 months) | $1,833 | $2,099 | +$266 (+14.5%) |
| E-2 | $2,055 | $2,353 | +$298 (+14.5%) |
| E-3 (2 years) | $2,327 | $2,664 | +$337 (+14.5%) |
| E-4 (4 years) | $2,961 | $3,390 | +$429 (+14.5%) |
How the Pay Raise Affects Your LES
Your Leave and Earnings Statement will reflect several changes:
What Changes
- Basic Pay: Increases 4.5% (or ~14.5% for E-1 to E-4)
- Tax Withholding: May increase due to higher pay
- TSP Contributions: If contributing a percentage, dollar amount increases
- SGLI: Remains the same ($31 for $500,000 coverage)
What Doesn’t Change Based on Pay Raise
- BAH (changes based on location, not pay grade)
- BAS (separate formula based on food costs)
- Special and incentive pays (separate adjustments)
Historical Pay Raise Context
| Year | Pay Raise | Notes |
|---|---|---|
| 2025 | 4.5% | Plus junior enlisted boost |
| 2024 | 5.2% | Largest since 2002 |
| 2023 | 4.6% | Above inflation target |
| 2022 | 2.7% | Standard increase |
| 2021 | 3.0% | COVID-era increase |
| 2020 | 3.1% | Pre-pandemic |
Impact on Total Military Compensation
The pay raise affects more than just your monthly paycheck:
Retirement Calculations
- Higher basic pay means higher “High-3” average at retirement
- BRS matching contributions increase with higher pay
- Future retirement checks will be larger
TSP Contributions
- If contributing 5% of pay, more dollars go into your TSP
- Government matching increases proportionally
- Compounding growth on higher contributions
Social Security Credits
- Higher pay means more Social Security credits earned
- Future Social Security benefits increase slightly
Pay Raise vs. Inflation
The 4.5% military pay raise is designed to keep pace with inflation. For 2025:
- Inflation rate (CPI): Approximately 3-4%
- Military pay raise: 4.5%
- Real pay increase: Approximately 0.5-1.5%
For junior enlisted receiving the 14.5% increase, this represents a significant real pay increase—approximately 10-11% above inflation.
How Pay Raises Are Determined
Military pay raises are tied to the Employment Cost Index (ECI) by default, but Congress can authorize different amounts:
- Bureau of Labor Statistics publishes ECI
- President proposes pay raise in budget
- Congress may accept, increase, or (rarely) decrease the proposal
- National Defense Authorization Act (NDAA) finalizes the raise
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