Edward: Welcome to the MIL News Weekly for 4-10 January 2026, your essential
guide to the latest news impacting the military and veteran community.
Whether you're currently serving in uniform, a military retiree, a veteran,
or a family member, this is your source for the critical updates you need to know.
Each week, we cut through the noise to bring you the most important developments
from the Pentagon, Capitol Hill, and the Department of Veterans Affairs.
Weâll cover everything from new policies and pay raises affecting
active and reserve forces, to changes in healthcare and benefits for
retirees, and the latest on VA services and legislation for our veterans.
Let's get you informed.
Hereâs whatâs happened this past week.
Issues That Affect Active and Reserve Military Personnel
Compensation and Benefits: The 2026 Financial Landscape
As the new year commences, the primary focus for service members and their
families is the financial adjustment resulting from the Fiscal Year 2026
National Defense Authorization Act.
Effective 1 January 2026, a statutory pay raise of 3.8
percent has been applied to all ranks and branches, a figure that
was finalized and signed into law by President Trump on 18 December 2025.
This raise is not merely a bureaucratic adjustment but a strategic retention
tool designed to maintain the purchasing power of military families in an economy
recovering from inflationary pressures.
Basic Pay Analysis and Economic Context
The 3.8
percent increase is pegged to the Employment Cost Index (ECI), a
quarterly economic series detailing the changes in the costs of labor for
businesses in the United States economy.
By law, military pay raises are intended to match wage growth in the
private sector to ensure the Department of Defense can compete for talent.
Unlike the Fiscal Year 2025 adjustment, which applied targeted, irregular
increases to junior enlisted personnel to address a recruiting crisis,
the 2026 adjustment is a uniform percentage applied across the board.
This return to uniformity suggests a stabilization in the Departmentâs
compensation strategy, focusing on sustaining the entire force
structure rather than emergency patching of specific cohorts.
For the junior enlisted force, specifically those in the pay grade
of E-1 with less than four months of service, the monthly basic pay
has risen to approximately $2,407.
This baseline is critical; it represents the entry-level value proposition for
young Americans considering service.
When annualized, this base pay, combined with tax-free allowances, attempts
to offer a competitive alternative to the private sector labor market.
Moving up the rank structure, the financial impact becomes more pronounced.
A Staff Sergeant or Petty Officer First Class (E-6) with over a decade of
serviceâoften considered the operational backbone of the militaryâwill now see a
monthly basic pay of approximately $4,759.
This demographic is crucial for retention, as these individuals
possess the institutional knowledge and technical expertise required
to train the next generation.
The increase serves as a hedge against the lucrative offers these skilled
technicians often receive from defense contractors and the private sector.
In the officer corps, the adjustments ensure that leadership compensation
remains commensurate with responsibility.
A newly commissioned Second Lieutenant or Ensign (O-1) now enters the service with a
monthly base pay of approximately $4,150.
Further along the career path, a Major or Lieutenant Commander (O-4)
with over ten years of service will earn approximately $9,419 per month.
It is important to note, however, that compensation for the most senior officers
(O-7 through O-10) remains capped by Level II of the Executive Schedule.
This statutory cap, which was set at $18,808.20
per month in 2025, ensures that military leadership is not
compensated at a rate exceeding that of senior government civilians.
While the 2026 cap will adjust slightly, the principle of compression
at the top remains a topic of discussion among manpower analysts.
The Expansion of Allowances
While basic pay constitutes the taxable salary of a service member, the system
of allowances accounts for a significant portion of total military compensation.
These tax-exempt payments have undergone substantial revisions effective
1 January 2026, aimed at directly addressing the cost of living and the
unique hardships of military life.
The Department of Defense has implemented an average 4.2
percent increase in BAH rates for 2026.
This adjustment comes on the heels of consecutive years of significant
increases, including a 5.4
percent rise in previous cycles, reflecting a concerted effort to catch
up with a volatile housing market.
The BAH program is designed to cover 95 percent of housing costs, with the
service member expected to contribute the remaining 5 percent out of pocket.
The 4.2
percent average is a national aggregate; the actual impact is highly localized.
Service members stationed in high-cost coastal areas such as San Diego,
California, Norfolk, Virginia, and the National Capital Region will
likely see increases exceeding the average, reflecting the acute rental
market pressures in these zones.
Conversely, installations in rural areas with stagnant housing markets
may see minimal adjustments.
A critical feature of the BAH system is "rate protection," which ensures
that a service member already residing in a location will not see their BAH
decrease if the local market rates fall.
They retain the higher, legacy rate, providing financial stability for
lease agreements already in place.
To offset the rising cost of food, BAS has been increased by 2.4
percent for 2026.
This allowance is adjusted annually based on the United States Department
of Agriculture's food cost index.
Unlike BAH, BAS is a flat rate based on status (officer vs.
enlisted) rather than location or rank, operating on the assumption that the
cost of a standard basket of goods is relatively consistent for service members
across the continental United States.
In a move that directly addresses the strains of operational tempo on
military families, the Fiscal Year 2026 NDAA legislated an increase
in the Family Separation Allowance from $250 to $300 per month.
This represents the first statutory increase to FSA in nearly two decades.
This allowance is payable to service members with dependents who are
deployed, sent on temporary duty, or otherwise separated from their families
for more than 30 consecutive days.
The $50 increase, while modest in absolute terms, is a symbolic
recognition by Congress of the enduring burden placed on military
families during prolonged absences.
Financial Hygiene and Tax Withholding
With the commencement of the new tax year on 1 January 2026, the Defense
Finance and Accounting Service (DFAS) and military financial counselors are urging
a universal review of tax withholdings.
The 3.8
percent pay raise, combined with any changes in spousal income or
family size, fundamentally alters a service member's tax liability.
Personnel are advised to utilize the Internal Revenue Service Tax Withholding
Estimator to determine the correct number of allowances to claim on their W-4 forms.
Adjustments made in early January 2026 can prevent the dual pitfalls of
under-withholdingâwhich results in a tax bill and potential penaltiesâor
excessive over-withholding, which acts as an interest-free loan to the government.
Furthermore, DFAS has clarified the nature of "mid-month pay," often a
source of confusion for junior personnel.
It is technically an advance or "micro-loan" of half the
estimated net monthly pay, rather than a separate earning event.
Understanding this distinction is vital for personal budgeting
and cash flow management.
Legislative Landscape: Appropriations and Contingency Planning
The 119th Congress returned to session in January 2026 with a
robust agenda focused on securing the funding necessary to support the
authorizations granted in the NDAA.
While the NDAA provides the legal authority for defense programs,
the appropriations bills provide the actual treasury funds.
Two pieces of legislation were central to the discourse during
the week of 4 January 2026.
H.R.
5401: Pay Our Troops Act of 2026
Sponsor: Representative Jennifer A.
Kiggans Status: Introduced 16 September 2025; Active in January 2026 discussions.
H.R.
5401, titled the "Pay Our Troops Act of 2026," has emerged as a critical safety
net for the military community amidst the perennial threat of legislative gridlock.
As the fiscal landscape remains contentious, this bill is designed to
insulate the men and women of the Armed Forces from the effects of a government
shutdown or a lapse in appropriations.
The bill authorizes continuing appropriations specifically for the
pay and allowances of members of the Armed Forces, including the Coast
Guard, during any period in Fiscal Year 2026 where interim or full-year
appropriations are not in effect.
The scope of this protection extends to active duty personnel and
members of the reserve components who are performing active service.
Crucially, the legislation recognizes the integrated nature
of the modern military force.
It extends funding coverage to civilian personnel and contractors of the
Department of Defenseâand the Department of Homeland Security in the case of
the Coast Guardâwhom the Secretary determines are providing essential
support to members of the Armed Forces.
This provision addresses the "hollow force" phenomenon observed in previous
shutdowns, where uniformed personnel were required to report for duty
but lacked the necessary logistical, administrative, and maintenance
support from the civilian workforce.
The funding authority under this bill would expire upon the enactment of
a full appropriations bill or on 1 January 2027, whichever comes first.
H.R.
3944: Military Construction, Veterans Affairs, and Related
Agencies Appropriations Act, 2026
Sponsor: Representative John Carter Status: Passed House 25 June 2025;
Senate action ongoing; parts included in package passed November 2025.
H.R.
3944 represents the fiscal machinery behind the military's
physical infrastructure and the veteran support system.
While a significant portion of this bill addresses Veterans Affairs, its
provisions for Military Construction (MILCON) are vital for the quality
of life and operational readiness of active duty and reserve personnel.
The bill appropriates over $19 billion for military construction projects.
A major focus of this funding is the improvement of living quarters, with
specific line items dedicated to barracks renovation and the construction
of new child development centers.
These investments address two of the most persistent quality-of-life
complaints from service members: substandard housing conditions and
the lack of affordable childcare.
Furthermore, the bill funds critical operational facilities in the Indo-Pacific
region, supporting the strategic pivot to Asia and the dispersal of forces
required for modern deterrence doctrines.
For the Reserve Component, the bill is particularly significant.
It allocates $358.5
million for Army National Guard military construction and $210.5
million for Air National Guard military construction.
These funds are earmarked for readiness centers, maintenance shops, and
training ranges that allow Guard units to train on the same modern equipment
as their active duty counterparts.
Additionally, the bill includes strict oversight mandates for privatized
military housing, requiring detailed reports on the condition of family
housing at installations like Fort Leonard Wood, Missouri, to ensure that
issues such as mold and maintenance backlogs are aggressively remediated.
Executive Action: Prioritizing the Warfighter
On 7 January 2026, President Trump signed a potentially paradigm-shifting
Executive Order titled "Prioritizing the Warfighter in Defense Contracting".
This directive represents a new, aggressive posture by the executive branch
towards the defense industrial base, signaling a shift from a laissez-faire
approach to one of strict accountability and production prioritization.
The Executive Order is predicated on the assertion that the defense
industrial base has, in recent years, prioritized investor returns over
national security requirements.
The text of the order explicitly criticizes the practice of stock
buybacks and excessive dividend payouts by defense contractors who
are simultaneously failing to meet production targets or delivery schedules.
The objective is to force a reallocation of corporate capital back into
research and development, manufacturing infrastructure, and workforce expansion.
Under the provisions of the order, the Secretary of Defense is empowered
to prohibit defense contractors from engaging in stock buybacks or issuing
dividends if they are found to be "underperforming" on government contracts.
The definition of "underperformance" is broad, encompassing insufficient
production speed, lack of investment in capacity, or a failure to
prioritize government orders over other commercial interests.
The timeline for implementation is aggressive.
The Secretary of Defense is directed to identify underperforming contractors
within 30 days of the orderâby early February 2026âand to develop future
contract provisions that would curb executive pay and corporate
distributions within 60 days.
For active duty commanders and logistics officers, this Executive Order aims
to alleviate the chronic supply chain bottlenecks that have plagued readiness.
The intent is to increase the availability of munitions, spare
parts, and next-generation platforms.
However, industry analysts warn of potential short-term friction between
the Department of Defense and major prime contractors, which could lead
to legal challenges or contract renegotiations before the desired
production efficiencies are realized.
Operational Context and Deployments
The news cycle from 4 January 2026 to 10 January 2026 underscores the
volatile global environment in which U.S.
forces are currently operating.
The active and reserve components are engaged in a complex web of deterrence,
combat support, and domestic operations.
In Eastern Europe, the conflict in Ukraine continues to consume vast amounts
of materiel and strategic attention.
Intelligence reports released during the week indicate that Russian military
fatalities in Ukraine have reached unsustainable levels, with over 35,000
personnel lost in December 2025 alone.
This rate of attrition is forcing a potential shift in Russian
tactics, raising the specter of asymmetric escalation or the
use of unconventional weapons.
U.S.
forces in Europe remain on high alert, bolstering the eastern flank
of the NATO alliance and managing the logistics of aid to Ukraine.
In the Middle East, tensions with Iran remain acute.
Pentagon briefings on 10 January 2026 provided updates on the U.S.
strategic posture following recent strikes on Iranian nuclear infrastructure and
continued kinetic operations against Houthi rebels in Yemen to secure
freedom of navigation in the Red Sea.
These operations involve a significant naval and air presence, requiring
sustained deployments of carrier strike groups and land-based air wings.
Domestically, the National Guard continues to fulfill its dual role as a combat
reserve and a homeland security force.
Approximately 175 members of the West Virginia National Guard remain
deployed in Washington, D.C.,
supporting the "crime emergency" declaration issued in late 2025.
This mission involves static security and roving patrols, highlighting the
continued reliance on the Guard for domestic law enforcement support duties.
Issues That Affect Retired Military Personnel
2026 Cost-of-Living Adjustment (COLA)
Effective 1 December 2025, and reflected in the first retirement
checks of 2026 which were paid on 31 December 2025, military retired
pay has been adjusted by 2.8
percent.
This adjustment is statutorily linked to the Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W), ensuring that the purchasing
power of the annuity is preserved against the erosion of inflation.
For the majority of retireesâthose under the "High-3" or "Final
Pay" retirement systemsâthis 2.8
percent increase is applied fully.
To illustrate the impact: a retiree who previously received a monthly
gross payment of $2,500 will see an increase of approximately $70, bringing
the new monthly total to $2,570.
A retiree with a $4,000 monthly annuity will see an increase of roughly $112,
resulting in a new payment of $4,112.
However, a specific subset of the retiree population faces a different reality.
Retirees who entered service after 1 August 1986 and elected the "CSB/Redux"
retirement plan at their 15-year mark receive a permanently reduced COLA.
Under the terms of the CSB/Redux plan, which offered a $30,000 cash
bonus while active, the annual COLA is capped at the CPI minus 1 percent.
Consequently, these retirees are receiving only a 1.8
percent increase for 2026.
While the 1 percent difference may seem minor in a single year, the
compounding effect over decades of retirement results in a significant
divergence in purchasing power compared to their High-3 counterparts.
A "catch-up" provision exists at age 62 to restore the base amount, but
the years of reduced growth represent a permanent loss of potential income.
Beneficiaries of the Survivor Benefit Plan (SBP) also see their annuity
payments increased by the full 2.8
percent, ensuring that the widows and widowers of service members
maintain their financial footing.
While a 2.8
percent increase is a positive adjustment, it represents a decrease from the 3.2
percent COLA seen in 2024 and the significantly higher adjustments of
the post-pandemic inflationary period.
Financial planners and military associations advise retirees to
carefully measure this increase against their personal inflation rates.
For many seniors, the "personal CPI" is heavily weighted towards
healthcare, prescription drugs, and housingâsectors where inflation
often outpaces the general basket of goods used to calculate the CPI-W.
The 2026 COLA, therefore, may essentially be a maintenance adjustment rather
than a net gain in disposable income.
TRICARE and Health Care Changes
Pharmacy Copayment Increases
Effective 1 January 2026, TRICARE pharmacy copayments have increased.
These changes disproportionately affect the retired community, which utilizes
maintenance medications at a higher rate than the younger active duty population.
The Department of Defense continues to structure these costs to incentivize
the use of the home delivery system over retail pharmacies.
For a 30-day supply of a generic (Tier 1) drug at a retail network pharmacy,
the copay remains steady at $16.
However, utilizing the home delivery service for a 90-day supply of the
same generic drug costs only $14.
This pricing model implies that a retiree can obtain three times the
medication for less than the cost of a single month at a retail counter.
The divergence is even more pronounced for Brand-Name (Tier 2) drugs.
A 30-day retail supply now costs $48, an increase of $5 from the 2025 rates.
In contrast, a 90-day supply via home delivery costs $44.
This means a retiree using retail pharmacies for a brand-name maintenance
drug would pay $144 for a 90-day period ($48 x 3), whereas switching to mail
order would cost only $44âa savings of $100 per medication every three months.
Non-Formulary (Tier 3) drugs have seen the steepest hike, rising to $85 for both
retail (30-day) and mail order (90-day).
The cost differential is not accidental; it is a deliberate policy
lever designed to shift volume to the more cost-efficient mail order
system managed by Express Scripts.
Retirees are strongly advised to review their prescription profiles in
early January and proactively switch eligible maintenance drugs to Home
Delivery to mitigate these rising costs.
Defense Finance and Accounting Service (DFAS) Updates
The administrative machinery of retirement pay is also undergoing
modernization, requiring retirees to adapt to digital-first processes.
Tax Season Preparation
DFAS has released the schedule for the distribution of 2025 tax
documents, a critical administrative event for the retired community.
The 1099-R forms, which detail retired pay distributions and tax withholding,
became available on the myPay online portal in mid-December 2025.
Hard copies for those who have not opted out of mail
delivery were sent via the U.S.
Postal Service by 31 January 2026.
A significant change for the 2026 tax season concerns the Affordable
Care Act (ACA) documentation.
In accordance with new IRS guidance, the 1095-B and 1095-C forms,
which provide proof of health insurance coverage, are no longer
automatically mailed to all retirees.
As of the 2026 tax season, retirees must access these forms via myPay or
request a reissue through the askDFAS online system starting 9 February 2026.
This shift reduces administrative costs but requires retirees to ensure their
myPay access credentialsâlogin IDs and passwordsâare active and up to date.
CRDP/CRSC Open Season
The annual Open Season for Concurrent Retirement and Disability Pay
(CRDP) and Combat-Related Special Compensation (CRSC) is active from
1 January 2026 to 31 January 2026.
This period allows eligible retirees to switch between
the two forms of compensation.
Most retirees with a Department of Veterans Affairs (VA) disability rating
of 50 percent or higher automatically receive CRDP, which restores their
retired pay that would otherwise be offset by their disability pay.
However, CRDP is taxable income.
Retirees with combat-related disabilities may be eligible for
CRSC, which is a tax-free entitlement.
The decision to switch is often complex.
While CRSC is tax-free, it may pay a lower gross amount than CRDP
depending on the specific disability rating and the percentage of that
rating deemed "combat-related."
Therefore, a retiree might choose the taxable CRDP if the net, after-tax
amount is higher than the tax-free CRSC.
Conversely, a retiree in a high tax bracket might benefit more
from the tax-free nature of CRSC.
DFAS encourages retirees to utilize online comparison calculators during
this January window to determine the most financially advantageous
option for their specific situation.
Issues That Affect Veterans Affairs
Disability Compensation and Legislative Support
Aligned with the Social Security COLA, Department of Veterans Affairs disability
compensation rates increased by 2.8
percent effective 1 December 2025.
This increase is vital for disabled veterans who rely on these
tax-free payments as a primary or supplementary income source.
For a veteran with a 100 percent disability rating and no
dependents, the monthly rate has risen to approximately $3,938.58.
This figure represents the baseline for the most severely disabled veterans,
with additional amounts added for spouses, children, and parents.
For a veteran with a 10 percent disability rating, the new rate is $180.42.
Specific adjustments have also been made to Special Monthly Compensation
(SMC) rates, which compensate for specific severe disabilities such as
the loss of use of a limb or organ.
For example, the SMC-K rate, often awarded for the loss of use of a
creative organ, is now $139.87.
The Major Richard Star Act: The Fight for Concurrent Receipt
The legislative battle for the Major Richard Star Act (H.R.
1282 / S.
344) intensified significantly during the first week of January 2026.
This legislation addresses a perceived inequity affecting
combat-injured veterans.
Under current law, veterans who are medically retired with fewer than 20 years
of service due to combat injuries are subject to a "dollar-for-dollar offset."
This means that for every dollar of VA disability compensation they
receive, their Department of Defense retirement pay is reduced by one dollar.
Effectively, they must fund their own disability compensation out
of their earned retirement pay.
The Major Richard Star Act seeks to eliminate this offset, allowing these
combat-injured veterans to receive both their full vested longevity pay
and their VA disability compensationâa policy known as "Concurrent Receipt."
During the week of 4 January 2026, advocacy groups
rallied support for S.Amdt.
4056, a legislative amendment designed to attach the Major Richard
Star Act to broader funding bills to bypass legislative gridlock.
Supporters argue that the current offset acts as a "tax"
on veterans for their injuries.
Opponents in Congress continue to cite the high cost of the bill,
estimated at over $7 billion over ten years, as a barrier to passage.
The issue garnered significant local media attention in states
like Tennessee and Mississippi this week, with veterans' organizations
urging constituents to pressure their representatives to prioritize the measure.
H.R.
983: MGIB-SR Tuition Fairness Act
Signed into Law (Public Law 119-55).
This newly enacted law serves as a critical bridge for disabled veterans who
may be members of the Reserve Component looking to retrain for civilian careers.
Effective 1 August 2026, the law mandates that public educational
institutions charge in-state tuition rates to reservists using
the Montgomery GI Bill-Selected Reserve (MGIB-SR), regardless of
their actual residency status.
This is particularly relevant for disabled veterans in the Reserves who
may need to move across state lines to access specialized medical care or
rehabilitation facilities but wish to continue their education simultaneously.
By capping tuition at the in-state rate, the law ensures that their educational
benefits cover a larger portion of the cost, reducing the need for student loans.
H.R.
3944: VA Funding Provisions
The appropriations bill H.R.
3944 contains specific provisions securing the financial
future of veteran healthcare.
It provides $133.5
billion in discretionary funding and $312.3
billion in mandatory funding for the VA.
Most notably for disabled veterans, the bill includes $52.7
billion for the Toxic Exposures Fund (TEF).
This fund is the financial engine of the PACT Act, covering the costs of
healthcare and disability compensation for veterans suffering from conditions
related to burn pits, Agent Orange, and other environmental hazards.
This continued funding ensures that the presumptive conditions established by
the PACT Act remain fully supported, preventing a backlog in claims processing
or a shortage of specialized care.
Electronic Health Record Modernization (EHRM)
The transition to the new Federal Electronic Health Record (EHR),
based on the Oracle Cerner platform, reached a new milestone
during the week of 4 January 2026.
On 10 January 2026, VA officials provided updates on the deployment
process within the VA Northern Indiana Health Care System.
For disabled veterans, particularly those with complex, multi-system
injuries requiring care from both DoD and VA specialists, the EHRM program
promises a seamless continuity of care.
The goal is a single, lifetime health record that follows the
service member from their induction into the military through their
transition to veteran status.
This would eliminate the burden on disabled veterans to physically
carry paper records between providers or request transfers of data.
However, the program has been plagued by stability issues and cost overruns.
The FY2026 appropriations bill provides $2.5
billion for the program, which is less than the $3.5
billion requested by the Administration.
This funding shortfall may necessitate a slower, more deliberate rollout
schedule to ensure system stability before expanding to new sites, a
strategy intended to protect patient safety during the transition.
And that's your Weekly Briefing.
Staying on top of these changes is key to navigating your career,
your retirement, and your benefits.
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