Bonus checks for U.S. military service members announced by President Donald Trump on Wednesday night will come from a pool of money used to supplement troops' housing income.

Funds appropriated by Congress to supplement monthly housing costs will be used to pay the $2.6B bill for the $1,776 checks Trump promised for every active-duty service member in a televised speech.

The money is part of $2.9B in additional Defense Department funding passed in the One Big Beautiful Bill Act, the expansive tax and policy package signed by the president on July 4, that was earmarked to supplement the military’s basic allowance for housing entitlement, a monthly stipend members of the military use to pay for housing when government facilities aren’t available.

The Defense Department will disburse $2.6B of the funding as a one-time payment, which the president dubbed a “warrior dividend,” to roughly 1.3 million active-duty military members and another 174,000 reservists, a spokesperson for the Trump administration told The Wall Street Journal.

Roughly a million service members receive the basic allowance for housing entitlement, and the Department of Defense estimated that it would spend $29B on the program in 2025. The Pentagon boosted the average monthly payment for 2026 by 4.2% in December.

During his prime-time speech Wednesday, Trump said the tax bill and tariffs had made the one-time payments possible.

“Because of tariffs, along with the just passed One Big Beautiful Bill, tonight I am also proud to announce that more than 1.45 million military service members will receive a special warrior dividend before Christmas,” he said from behind a lectern flanked by holiday decorations.

The payments were the only major new policy announcement of the speech, which mostly focused on outlining the administration’s accomplishments across the year.

“Eleven months ago, I inherited a mess, and I’m fixing it,” Trump began his address to the nation.

Tariffs have been one of the administration’s key tools to reshape the domestic and global economic landscape. Total revenue from customs duties reached $200B during the first 11 months of Trump’s term, with monthly collections going from $7B in January to $30B in September after the president’s tariffs had kicked in, according to the WSJ.

The money coming in from tariffs flows to the Department of the Treasury’s general fund, the same account that holds Americans' income taxes. How that cash is spent has long been considered the domain of Congress, and the tariff funds haven’t been earmarked for a specific goal.

Trump earlier in December also announced a $12B payment program for American farmers that he said was made possible through tariffs. Farmers have struggled with increased equipment and materials costs and decreased prices on commodity crops like corn and soybeans. Many in the agricultural community blame tariffs.

The president said earlier this month that tariffs were pulling in “literally trillions of dollars” that will be used to pay down the federal deficit, with the balance being distributed through “a nice dividend to the people.”

In November, he said every American could eventually receive a $2K check.