2027 Military Pay Raise: What Service Members Should Know

Key Points:

• 2027’s military pay raise is not finalized
• The White House proposed a tiered pay raise based on rank
• The Senate proposed a 3.6% raise for all service members
• A final decision is expected before the end of the year

The 2027 Military Pay Raise Proposals

Each year, Congress passes the National Defense Authorization Act (NDAA), which authorizes funding and policy for the U.S. military. While lawmakers may disagree on specific provisions, the NDAA has long been regarded as must-pass legislation.

One of the most closely watched elements of the NDAA is the annual military basic pay increase. Typically, the process begins with a proposal from the White House, which is then considered by the House of Representatives and then the Senate as they develop their respective versions of the legislation. Once both chambers agree on a final version, the bill is sent to the President to be signed into law.

For 2027, the White House has proposed a tiered pay raise:

• E-5 and below: 7%
• E-6 through O-3: 6%
• O-4 and above: 5%

The Senate has taken a different approach, proposing a 3.6% raise for all ranks. Under that plan, every service member would receive the same percentage increase, rather than the graduated raises proposed by the White House.

How is the Pay Raise Calculated?

Military basic pay is tied to the Employment Cost Index (ECI), a Bureau of Labor Statistics figure that tracks civilian wage growth. The annual military pay adjustment is based on the change in the ECI from one year to the next, with the goal of keeping military compensation reasonably competitive with private-sector wages over time.

For 2027, the formula suggested a 3.6% pay raise. In many ways, that figure serves as the baseline — the starting point on which alternative proposals are based.

How Does the 2027 Pay Raise Compare to Previous Years?

The Senate-proposed 3.6% pay raise would be below the five-year average of 4.2%, but above the 10-year average of 3.4%.

The higher five-year average is largely a result of the raises approved in the years following the pandemic. As inflation increased and civilian wages rose, military pay adjustments also grew larger than their long-term historical average. As those pressures have eased, annual military pay increases have moved closer to their historical norms. For service members, that means the 2027 proposal looks less like an unusually high raise and more like a return toward a more typical range.

Notably, the debate surrounding the 2027 proposal is being shaped by the pay raise from 2025, when Congress approved a larger pay raise for many junior enlisted service members while providing a smaller increase for more senior ranks. Supporters of tiered, targeted raises argue they can improve recruiting and provide additional financial support to younger service members. However, the Senate Armed Services Committee has expressed concerns about repeating that approach, arguing that larger raises for junior ranks can narrow pay differences between grades and reduce the financial incentive for promotion.

What Happens Next?

The finalized pay raise should be finalized before the end of the calendar year, with larger paychecks reflecting the increase commencing in January. Until then, service members should view the White House’s tiered proposal and the Senate’s 3.6% proposal as a work in progress.

Regardless of the final percentage, a pay raise can be an opportunity to strengthen your financial position. Whether your priority is to pay down debt, build savings, increase TSP contributions, or work toward long-term goals, having a plan in place before the additional income arrives can help you make the most of it.

A First Command Financial Advisor can help you evaluate how a future pay increase fits into your broader financial strategy and identify appropriate ways to put those additional dollars to work.

Frequently Asked Questions

Are veterans and military retirees getting a pay raise in 2027?

Military retirees and many veterans typically receive annual cost-of-living adjustments (COLAs), which are determined through a separate process and are not tied to the military pay raise. The annual military pay raise applies to active-duty service members and members of the National Guard and Reserve.

Does the military pay raise affect BAH or BAS?

No. Military pay raises apply to basic pay, which is only one part of a service member's total compensation. Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) are adjusted separately and may increase by different amounts.

Do military pay raises affect bonuses or special pays?

Not automatically. Bonuses, special pays, and incentive pays are generally governed by separate authorities and funding decisions. While Congress may choose to increase certain bonuses or special pays, those adjustments are distinct from the annual military basic pay raise.