Basic Allowance for Housing

Basic allowance for housing (BAH) is a United States military privilege given to many military members. It was previously called Basic allowance for quarters (BAQ) and is administered by the Defense Travel Management Office (DTMO).
How it works.
Eligibility factors.
Basic allowance for housing is given to members so that they can provide housing for themselves and their dependents (usually spouse and children). BAH is given when the member or their dependents do not occupy government quarters or barracks.
BAH is non taxable money paid on a monthly basis. There are 3 factors for determining the amount of BAH:
The following "do not" affect the amount of BAH:
Reservists who are activated, even if they are housed by the military during their mobilization, are still paid BAH on the assumption that a reservist still may have the civilian obligations (like a mortgage) that BAH is designed to offset.
Lastly, veterans who are full-time students taking advantage of the Post 9-11 GI Bill are given an allowance pegged to the BAH with dependents rate for an E-5, irrespective of their rank or dependent status.
A service member who is married makes substantially more allowance money than a single member. Reports of soldiers marrying for the extra pay are not uncommon.
Determining allowances.
Robert D. Niehaus, Inc. (RDN), a private firm based in California is contracted to provide the data used to calculate BAH allowances.
Locations.
Every location in the U.S. has a BAH, including those without a significant military population. Non-military areas are combined with similar priced rental markets based on U.S. Housing and Urban Development (HUD)'s Fair Market Rent (FMR) data, and then use same RDN BAH source data available for similar areas. These comparably priced groups are called "County Cost Groups" (CCGs). There are 39 CCGs in the U.S, consisting of half of all counties (about 1,500) containing less than two percent of the uniformed services' population eligible to receive BAH.
Methodology.
The following data sources are used to determine BAH:
Timing.
BAH changes every year, based on data gather during the Summer / Spring active rental seasons. Generally BAH changes 2-5% annually and 5-10% in "hot" markets.
OHA.
Overseas Housing Allowance, or OHA may be given instead of BAH when a member is stationed outside the United States. Overseas Housing Allowance (OHA) which is similar, but has some significant differences. In OHA, each country, and each region in a country have a cap on a per month basis as to what the military will pay for housing. OHA is the exact amount of monthly rent in the local currency (so the exchange rate is taken into consideration each month as the member is paid in US dollars) up to the cap.
OHA may also be paid in certain circumstances if the dependents are living overseas, for example if a member is deployed, and the dependents stay in a country outside of the US.
Frequently a "utility allowance" also accompanies OHA. This is usually a flat rate given to the member to cover the cost of utilities, regardless of the actual amount.