MIL News Weekly

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.

We’ll 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.

Here’s what’s 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 Department’s

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

service—often considered the operational
backbone of the military—will 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-withholding—which results in a
tax bill and potential penalties—or

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 Defense—and the Department
of Homeland Security in the case of

the Coast Guard—whom 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 order—by early
February 2026—and 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 retirees—those
under the "High-3" or "Final

Pay" retirement systems—this 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 housing—sectors 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 $44—a 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 credentials—login IDs and
passwords—are 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 compensation—a
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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