Alaska Income Tax Calculator

Taxes in Alaska

Alaska State Tax Quick Facts

• Income tax: None
• Sales tax: 0% - 7.50%
• Property tax: 1.17% average effective rate
• Gas tax: 8.95 cents per gallon of regular gasoline or diesel

Alaska Income Taxes

America’s largest and northernmost state also has the lowest taxes in the nation, as there are no statewide income or sales taxes in Alaska. Residents do need to file a federal tax return, though no state paperwork is required. Residents also receive annual checks from the state just for living there through the Permanent Fund Dividend. That doesn’t mean Alaskans pay no taxes at all, however.

There are still local sales taxes, which range from 0% to 7.50%, as well as property taxes. The average annual property tax payment is $3,570, one of the highest in the country. Residents must also pay gas taxes and “sin” taxes on alcohol and cigarettes.

A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Alaska Permanent Fund Dividend

The Alaska Permanent Fund was created in 1976, when the Trans-Alaska Pipeline was nearing completion. The fund was established as a way of setting aside a portion of the state’s significant oil and mineral royalties for future generations, and it has grown to a value of over $50 billion. Every year, the fund pays out a dividend to permanent residents of Alaska. To claim one, you must have lived there continuously for at least one year.

The amount of the dividend varies year to year, depending on revenues to the fund and other factors. In recent years, dividend checks have ranged from a low of $878 to a high of $2,072. The payment in 2021 was $1,114. Checks are sent to every Alaska resident, not just adults or income earners. That means that if you have dependents, you receive a Permanent Fund dividend for them as well. If you’d like to invest the money in their future, Alaska makes it easy to move the dividend straight to a 529 college savings plan.

Furthermore, Alaskan students attending college out of state can continue to claim a dividend, as long as they express an intention to return to the state after graduation. There is one downside to the Permanent Fund dividend, however: The IRS considers it a taxable form of income. So it does need to be reported on your federal tax return.

Alaska Sales Tax

While there is no state sales tax in Alaska, some counties and cities do collect their own sales taxes. In fact, Alaska is the only state that does not have a statewide sales tax but does have local taxes (the other four states with no state sales taxes also do not have local sales taxes). The table below shows the total sales tax rates for every borough (the Alaskan equivalent of a county) and several major cities in Alaska.

The rules for sales tax vary between municipalities. In some jurisdictions, sales tax rates vary by season. For example, in Whittier, the sales tax rate is 5% from April to September and 0% the rest of the year. There are a few statewide exemptions, so expect products often exempted in other states (like food and prescription drugs) to be taxed in any Alaskan city or borough with a sales tax.

Alaska Property Tax

The most significant tax on the residents of Alaska is the property tax. Statewide, average annual property tax payments are $3,570 per year, which is equal to an effective property tax rate (annual payments as a percentage of home value) of 1.17%.

Rates vary widely between boroughs, however. In some, like the Hoonah-Angoon Census Area, the average effective rate is 0.69%, while in others, like Fairbanks North Star, it is about 1.47%. Anchorage has an effective property tax rate of 1.41%.

For those thinking about buying property in Alaska, our mortgage guide is a good place to start researching your mortgage options. It lays out the most important information about rates and other details for getting a mortgage in the Last Frontier.

Alaska Gas Tax

Alaska has the lowest gas taxes in the country. According to the American Petroleum Institute, the state tax on regular gasoline and diesel is just 8.95 cents per gallon.

Alaska Estate Tax

There is no estate tax in Alaska.

Alaska Alcohol Tax

The Last Frontier has some of the highest alcohol excise taxes in the country. The state’s excise tax on beer is $1.07 per gallon. That’s about 10 cents a beer, and the second highest tax on beer in the U.S. (Although the tax on beer produced by microbreweries is less than a third of that, at 35 cents per gallon).

Liquor is also heavily taxed. Any beverage with higher than 21% alcohol by volume is taxed at a rate of $12.80 per gallon.

Alaska Cigarette Tax

Smokers in Alaska pay relatively high cigarette taxes. A pack of 20 cigarettes is taxed at a rate of $2.00, or 10 cents per stick.

• If Alaska were its own country, it would be the 18th largest country by area in the world. It has an area of 663,300 square miles.
• The bear population of Alaska is approximately 135,000. Of these, the majority are black bears.
• The average high temperature for the month of January in Fairbanks is 1.1 degrees Fahrenheit. The average low is -16.9 degrees.