Trump’s ‘Warrior Dividend’ for military funded through Pentagon, not tariffs

President Donald Trump announced last week a $1,776 Christmas bonus for the military.

Here’s what to know about the so-called "warrior dividend" checks: 

‘Warrior dividend’ military check

The backstory:

While addressing the nation last week on Wednesday, President Trump announced his administration was sending checks of $1,776 to more than 1.4 million U.S. service members before Christmas, bonuses he called "warrior dividends."

What they're saying:

"One million, four hundred and fifty thousand military servicemembers will receive a special, we call, "warrior dividend" before Christmas. In honor of our nation’s founding in 1776, we are sending every soldier $1,776. Think of that, and the checks are already on the way," he said. 

The president largely credited tariffs for bringing in money. 

"We made a lot more money than anybody thought because of tariffs, and the bill helped us along. Nobody deserves it more than our military, and I say congratulations to everybody," Trump said Wednesday. 

The other side:

These payments, which several members of the military have said on social media have already hit their bank accounts, are being disbursed by the Pentagon from a $2.9 billion military housing supplement that was part of Trump’s "One Big Beautiful Bill Act" to augment existing housing allowances, according to a senior administration official who requested anonymity with The Associated Press to describe the payments.

A senior administration official told FOX News Digital the president had directed Secretary of War Pete Hegseth to offer the money as a one-time supplement to the basic allowance for housing for all active duty service members pay grades O-6 and below, including colonels for the Army, Air Force and Marine Corps and the captain rank in the Navy. Reservists ranked O-6 and below are eligible for the checks if they have been on active-duty orders for 31 days or more as of Nov. 30. 

RELATED: The 'Patriot Games': What we know about Trump's proposed high school athletic competition

Coast guard ‘Devotion duty’ payments

Separately:

Members of the U.S. Coast Guard will be getting a similar one-time payment, the Department of Homeland Security announced Thursday.

Dig deeper:

The "Devotion to Duty" payments, authorized by Secretary Kristi Noem a day earlier, will be $2,000 because, unlike the "Warrior Dividend," they are subject to taxes. The amount Coast Guard members take home will be closer to $1,776.

The payments, according to the Coast Guard, will be classified as "special duty pay." They will be paid for with money in a measure Trump signed in November, after a 43-day shutdown, that funds the government through January.

RELATED: $2000 tariff dividend check update: Trump says dividend refund checks coming in 2026

Trump $2,000 tariff dividend

Meanwhile:

Trump has teased the idea of using his sweeping tariffs on imports to give Americans dividends ever since he imposed them in April.

The backstory:

Trump is facing pressure to show he’s working to address rising costs for Americans, with prices remaining stubbornly high as he’s imposed double-digit tariffs on imports from almost every country. 

Inflation hit a four-decade high in June 2022 during Joe Biden’s presidency and then began to fall. But inflation has stayed elevated under Trump in part because of his tariffs.