When Donald Trump promised a one-time $1,776 payment for 1.45 million US military workers to mark the 250th anniversary of the Declaration of Independence during a primetime TV address on Wednesday, he pointed to his favorite source of federal funding.
“Because of tariffs”, the US president said, along with his massive tax-and-spending bill, “we are sending every soldier $1,776 – and the checks are already on the way. Nobody deserves it more than our military.”
“We made a lot more money than anybody thought because of tariffs, and the bill helped us along,” he added.
In reality, the payments will be funded by repurposing military housing assistance – approved by Congress as part of the One Big Beautiful Bill Act – the Washington Post reported on Thursday, citing an unnamed senior administration official.
The pledge to issue a so-called “warrior dividend” – a policy worth about $2.5bn, which he suggested was finalized “about 30 minutes” before his address – had raised immediate questions, particularly ahead of a highly anticipated decision by the supreme court that could force the administration to return billions of dollars the US has raised from steep tariffs on foreign goods.
“Would it be a complete mess?” Justice Amy Coney Barrett asked about prospective tariff reimbursement during oral arguments in November. “It seems to me like it could be a mess.”
On Trump’s watch the overall average US effective tariff rate has surged to 16.8%, its highest level since 1935, according to The Budget Lab at Yale, with an average hit to households of about $1,700.
Details also remained unclear about precisely who qualifies to receive the dividend, when it will be issued, its taxable status and its effect on military pay and benefits.
The US defense secretary, Pete Hegseth, said in a video posted on Thursday that the payment would “provide 1776 with a whole new modern meaning for our joint force”, adding that the payment would be tax-free and issued to more than 1.45 million service members “in the coming days”.
“This has never happened before, every member of our military, from E-1 to O-6,” Hegseth said, referring to military pay grades from private, airman basic and seaman recruit to the senior officers in the ranks of colonel, captain and commander.
The announcement comes as Operation Southern Spear is amassing forces in the Caribbean in what was initially described as an anti-narcotics operation against Venezuela’s Maduro regime, and as US forces suffered three casualties during an Isis attack in Syria.
But despite Trump saying the payment will go out to “every soldier”, it remains unclear if national guard and reserve members meet active-duty criteria. “Under federal law, most bonuses and special pay are treated as taxable income unless Congress specifies otherwise”, Military.com advised, pointing out that no tax exemption had been announced.
The Trump administration has repeatedly floated sending out stimulus checks to all Americans below an unspecified income level, funded by tariffs, amid controversy over the impact of Trump’s economic policy on prices and affordability.
The first Trump administration sent out two rounds of stimulus checks to US households during the early days of the Covid-19 pandemic. The Biden administration also sent one. In total, more than 476m payments totaling $814bn in financial relief were sent to Americans in 2020 and 2021.
