How the 2025 4.5% Pay Raise Affects Your LES

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

What This Means for Your Paycheck

Monthly Basic Pay Increase Examples

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

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

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:

1. Bureau of Labor Statistics publishes ECI
2. President proposes pay raise in budget
3. Congress may accept, increase, or (rarely) decrease the proposal
4. National Defense Authorization Act (NDAA) finalizes the raise

Resources

• DFAS 2025 Pay Tables
• DoD Pay Calculators
• Military.com Pay Information