In a significant development, the compromise annual defense bill unveiled on Wednesday night has finalized the largest pay raise for service members in more than two decades. Under the National Defense Authorization Act (NDAA), service members are set to receive a 5.2% pay increase starting in January.

The pay bump endorsed by the NDAA is the same as the raise requested by the Biden administration and is based on a formula outlined in a separate federal law. This increase translates to an additional $1,100 per year for junior service members and over $10,000 per year for senior officers.

While the bill still requires final approval from both chambers of Congress and President Joe Biden's signature to become law, it is expected to pass smoothly before the end of the year.

This pay raise marks the highest increase for service members since 2002 when they received a 6.9% raise. Additionally, it follows a 4.6% raise that was implemented earlier this year.

Lawmakers have increasingly shown concern for service members' compensation amid efforts to address quality-of-life issues and tackle a recruitment crisis. Federal law mandates a pay raise for troops every January, independent of the NDAA. However, the NDAA plays a crucial role in determining the specific increase amount and further addressing the financial well-being of service members.

The defense bill also includes provisions to support junior service members in terms of their finances. It allows military services to provide a monthly bonus to E-6s and below if prevailing economic conditions have an adverse impact. This bonus, which will be allowed in 2024, will be set by the service secretaries.

Moreover, the compromise bill permits the exclusion of the Basic Allowance for Housing (BAH) from income calculations for a stipend to support food-insecure troops who have a demonstrated need for extra income to meet basic necessities. However, this falls short of the original House draft, which aimed to categorically exclude BAH from income calculations for the Basic Needs Allowance.

It is worth noting that the NDAA might not be the final word on military pay for 2024. House Republicans included a provision in their version of the annual Pentagon spending bill that entails a 30% increase in pay for E-6s and below to ensure no service member earns less than the equivalent of $15 per hour. However, this proposal did not make it into the NDAA, with ongoing studies on military pay still under review by the House Armed Services Committee's quality-of-life panel.

The White House has expressed strong opposition to overhauling the pay chart in the appropriations bill at this time, citing an ongoing comprehensive review of military pay. The 14th Quadrennial Review of Military Compensation, expected to conclude by January 2025, initiated earlier this year.

As lawmakers continue negotiations for a final spending bill before the February deadline, service members can anticipate the significant pay raise set to come into effect in January. The raise not only reflects the government's recognition of their dedication but also aims to improve their overall financial well-being.