Fact Check: Is Trump-ordered warrior dividend for US troops tax-free?

WASHINGTON, DC: President Donald Trump said last month that the ‘warrior dividend’ ordered for American troops would be tax-free. The statement drew attention, prompting questions about the nature of the payment and whether it would indeed be exempt from federal taxation. Let us fact-check it.

Claim: Trump said the warrior dividend would be tax-free

On December 24, Trump spoke to reporters about the bonus, stating that the $1,776 payment would not be taxed.

“And, you know, in case you’re not aware of it, it’s tax-free. You don’t have to pay tax,” Trump said.

He emphasized that service members would keep the full amount. “In other words, you don’t have to send half of it back to the government 15 minutes after you get it. You don’t have to send anything back. So that’s $1,776,” he added.

Trump also highlighted the timing of the payout, saying it had been distributed before Christmas. “It’s tax-free. And we’ve distributed just about all of it in time for Christmas. And you’ve earned it,” he said.

During a New York Times interview this month, journalists Katie Rogers and Tyler Pager questioned Trump about tariffs and his earlier remarks on rebate checks. Trump initially appeared uncertain, asking, “I did do that? When did I do that?” before recalling the payment and saying, “Yeah, I’m thinking. Well, I did $1,776 for the military."

Fact Check: IRS confirms the warrior dividend is tax-free

On Friday, January 16, the Internal Revenue Service confirmed that the one-time $1,776 "Warrior Dividend" paid to service members in December 2025 was fully exempt from federal income tax.

In a joint statement, the Treasury Department and the IRS said that 'supplemental basic allowance for housing payments' made to uniformed service members in December 2025 “are not to be included in income by those who received the payments; they are not taxable.”

The IRS explained that federal tax law excludes “qualified military benefits” from gross income. According to the agency, basic allowance for housing payments fall under that category, making them exempt from federal taxation.

Trump’s announcement of the 'warrior dividend'

Trump announced the special 'warrior dividend' on December 17 while unveiling parts of his 2026 agenda. He said the one-time $1,776 payment would be issued to eligible Army service members in honor of the nation’s founding in 1776.

According to the announcement, the payments were set to go to approximately 1.45 million US Army personnel.

“The checks are already on their way,” Trump said at the time. “Nobody deserves it more than our military.”