Alaska Tax Guide: No Income Tax, No Sales Tax

Tax Overview

Alaska stands out as one of the most tax-friendly states in the nation, imposing neither a state income tax nor a statewide sales tax. This rare combination makes it an attractive destination for those looking to minimize their overall tax burden. The state funds its government primarily through oil revenues and federal transfers rather than broad-based taxation of its residents.

The Permanent Fund Dividend (PFD) is another unique feature. Each year, eligible Alaska residents receive a dividend check from the state's oil wealth savings account. The amount varies annually but has historically ranged from around $1,000 to over $2,000 per person, effectively creating a negative tax for many residents. This dividend is, however, subject to federal income tax.

While Alaska has no statewide sales tax, some local jurisdictions do levy their own sales taxes, which can reach up to 7.5% in certain areas. Property taxes in Alaska are moderate, and the state has some of the highest costs of living in the country, particularly for housing, food, and transportation in remote areas. Residents should also be aware that some boroughs impose local property taxes that vary significantly across the state.