The Trump administration will repurpose $2.6 billion in military housing assistance to pay $1,776 “warrior dividend” bonuses to service members, according to a senior administration official.
In a prime-time address Wednesday night, President Donald Trump announced the Christmastime bonuses “in honor of our nation’s founding in 1776.”
“Nobody deserves it more than our military. And I say congratulations to everybody,” Trump said.
The president said the money for the bonuses came from revenue from import taxes he’s imposed on trading partners worldwide. That was incorrect, however, and Trump does not have the authority to spend the money from tariffs without authorization from Congress.
But lawmakers this summer did approve $2.9 billion to supplement the military’s basic allowance for housing as part of Trump and the GOP’s mammoth tax and immigration law, the One Big Beautiful Bill.
Defense Secretary Pete Hegseth ordered the Pentagon to spend most of that money as a one-time payout on the bonuses, said the senior administration official, who spoke on the condition of anonymity because they were not authorized to speak publicly on the matter.
The use of the housing funds to pay the bonuses was reported earlier by Defense One.
Roughly 1.45 million service members, including 174,000 reservists, will receive the bonuses, which Hegseth said in a video Thursday would be tax-free.
“This warrior dividend serves as yet another example of how the War Department is working to improve the quality of life for our military personnel and their families,” Hegseth said.
Trump renamed the Department of Defense as the Department of War in September, designating that as the department’s “secondary title” and authorizing its use. It’s unclear whether Trump has the authority to permanently rename Cabinet departments without congressional approval.
“I can think of no better Americans to receive this check right before Christmas, whether it’s for pay, housing, faith, support, all elements of what we’re doing are to rebuild our military,” Hegseth said.
The defense secretary called the payment “a direct investment in the brave men and women who carry on the legacy of our armed forces every single day,” and said military members in pay grades E-1 to O-6 would be eligible. The top pay grade eligible includes the ranks of colonel in the Air Force, Army, Marines and Space Force, and captain in the Navy and Coast Guard.
Speaking in the Oval Office on Thursday, Trump said his staff originally presented him with a plan for $1,775 bonuses.
“And I said, ‘Wow, I think we can afford one more dollar,’” Trump said.
In Congress, reaction to the bonuses was mixed, largely along party lines. Sen. Roger Wicker (Mississippi), the Republican chairman of the Armed Services Committee, said in an interview that the payments were “quite appropriate.”
He added in a statement that the bonuses would “put real money in the pockets of our service members and their families, helping provide greater stability and improved housing options as they manage the unique demands of military life.”
Sen. Jack Reed (Rhode Island), the top Democrat on the panel, said he was concerned that pulling the money for the bonuses from the housing assistance program would prevent the Defense Department from improving housing for service members and conducting overdue maintenance.
“There has been a real fundamental need for housing improvements and maintenance,” Reed said. “I think they could find a better source for the funds.”
Sen. Chris Coons (Delaware), the top Democrat on the Senate Appropriations Defense Subcommittee, was more blunt — both about the purpose of the checks and Trump’s authority to issue them.
“Read the Constitution! You can’t just sprinkle the country with checks just because you came up with it late at night,” Coons said.
The National Defense Authorization Act, which Trump is set to sign into law Thursday evening, approves pay increases for troops, and the annual appropriations bill — which Congress has yet to pass — funds it, he said.
“That’s how we do this, not game-show checks. Not last minute whimsy by a president,” Coons said. “This is a classic campaign stunt that does not serve our warfighters, our Constitution, or our republic well.”
The Trump administration has a track record of aggressively shifting resources around the Pentagon to goose service members’ compensation.
During the government shutdown, the administration twice moved money from other parts of the Pentagon budget to keep paying troops. Doing so without the approval of lawmakers — who normally have a say over large changes in federal spending — was controversial in Congress, where aides from both parties acknowledged that the move was probably illegal.
Maegan Vazquez contributed to this report.
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