This bill establishes a new mechanism for adjusting special and incentive pays for members of the Armed Forces, aiming to ensure their value keeps pace with economic changes and basic pay increases. It mandates a one-time corrective increase for these pays, effective January 1 of the first year after enactment, calculated as the greater of the percentage increase in the Consumer Price Index (CPI) or the average basic pay since the last adjustment. Following this initial adjustment, the bill requires annual recurring increases every January 1, starting the second year after enactment. These annual adjustments will similarly be based on the greater of the annual CPI increase or the annual basic pay increase for service members, applying notwithstanding any existing statutory maximum limits on such pays. The legislation defines "covered special and incentive pay" to include various bonuses and allowances under chapter 5 and section 427 of title 37, and also clarifies the authority for providing special and incentive pays to members of the Reserve Components .