Key Tax Facts: Alaska
- No state income tax and no statewide sales tax
- Annual Permanent Fund Dividend is federally taxable
- Some municipalities impose local sales taxes up to 7.5%
- No state estate, inheritance, or corporate income tax
Estimate Your 2025 Federal Income Tax
Alaska State Income Tax Overview
Alaska has no state income tax on wages, salaries, retirement income, or investment income, and it is also the only state with no statewide sales tax - a combination that makes it one of the lightest personal-tax environments in the country. Alaska can afford this because its government is funded largely by oil and natural gas production; for decades, petroleum royalties and taxes have covered much of the state budget. A share of that resource wealth is saved in the Alaska Permanent Fund, which pays eligible residents an annual Permanent Fund Dividend (PFD). The PFD is a real cash payment, but it is subject to federal income tax, so Alaskans still file a federal return. While there is no statewide sales tax, many municipalities levy local sales taxes that can reach roughly 7.5% in some areas, so that advantage varies by where you live. Property taxes are the main local revenue source and are moderate overall, though higher in urban boroughs like Anchorage. Alaska also has no state estate tax, no inheritance tax, and no corporate income tax for most businesses. For a resident earning $100,000, the state income tax bill is $0 - versus several thousand dollars in a high-tax state like California - though Alaska's high cost of living offsets some of that advantage. Federal income tax still applies to all taxable income, including the PFD, using the same nationwide brackets and rules.
What Is Different About Alaska for Taxpayers
Deductions and exemptions
Alaska has no personal income tax, so there are no state deductions or exemptions to claim and no state return to file for wage earners.
Credits worth knowing
The Permanent Fund Dividend paid to residents each year is taxable on the federal return but not by the state, since the state has nothing to tax it with.
Retirement, capital gains, and other income
Retirement income, capital gains, and dividends are untaxed at the state level. Alaska has no state sales tax either; local boroughs and cities can levy their own, which is why the average combined rate is under 2%.
Rules summarized from the Alaska Department of Revenue guidance for tax year 2025. Amounts that index annually are described in general terms; confirm the current figure on the official form instructions.
Alaska Has No State Income Tax
Alaska has no state income tax. Residents may even receive an annual Permanent Fund Dividend from the state.
As a Alaska resident, your state income tax is $0. The calculator above estimates your federal income tax, which applies to all U.S. residents regardless of state.
Where Alaska Stands Among the 50 States
Alaska is one of 9 states with no tax on wage income (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming). Of the other 41 states, 14 use a flat rate and 27 use graduated brackets, with a median top rate of 5.2%.
On sales tax the picture is similar: Alaska's combined state and average local rate of 1.76% ranks #46 of 50, against a national median of 7.00%. Alaska manages to keep both income and sales taxes low, which usually means heavier reliance on property tax, severance tax, or tourism revenue.
Alaska State Tax at Five Income Levels (2025, single filer)
| Taxable income | Alaska tax | Effective rate | Marginal rate |
|---|---|---|---|
| $40,000 | $0 | 0.00% | 0% |
| $65,000 | $0 | 0.00% | 0% |
| $100,000 | $0 | 0.00% | 0% |
| $150,000 | $0 | 0.00% | 0% |
| $250,000 | $0 | 0.00% | 0% |
Brackets applied directly to the taxable-income figure shown, before Alaska-specific deductions, exemptions, or credits. Federal tax is separate and comes on top of every row.
Alaska shares no land border with another state, so there is no neighbor comparison to make; residents choosing where to live weigh it against the national picture above instead.
Frequently Asked Questions -- Alaska Income Tax
Does Alaska have a state income tax?
No. Alaska does not impose a broad-based state income tax on wages, salaries, or most personal income. Alaska has no state income tax. Residents may even receive an annual Permanent Fund Dividend from the state.
Do I still owe federal income tax as a Alaska resident?
Yes. Federal income tax applies to all U.S. residents regardless of state. Alaska residents pay the same federal tax brackets as everyone else -- only your state income tax is $0.
What taxes do Alaska residents pay instead of income tax?
Alaska has no state income tax on wages, salaries, retirement income, or investment income, and it is also the only state with no statewide sales tax - a combination that makes it one of the lightest personal-tax environments in the country. Alaska can afford this because its government is funded largely by oil and natural gas production; for decad...
How much does living in Alaska save compared with neighboring states?
Alaska has no bordering states; against the national median top rate of 5.2%, a $75,000 earner elsewhere typically pays several thousand dollars a year that a Alaska resident keeps.
Do I need to file a Alaska state tax return?
Alaska does not require a personal income tax return for most residents. You must still file a federal return with the IRS. Check the Alaska Department of Revenue for any state-specific obligations that may apply.
What is the sales tax rate in Alaska?
Alaska's combined state and average local sales tax rate is 1.76%. States without an income tax typically lean more on sales, excise, or property taxes to fund government services -- use our sales tax calculator to see how that adds up.
Understanding Your Alaska Tax Estimate
Your results combine two separate bills: federal tax owed to the IRS, and Alaska state tax -- which for residents here is $0. Alaska has no state filing requirement for personal income; you only file the federal return. For the mechanics of how bracket math actually works -- why your effective rate is almost always lower than your top bracket -- see our marginal vs. effective tax rate guide.
Combined Sales + Income Tax Picture
Alaska's combined state-plus-average-local sales tax rate is 1.76%. States without an income tax typically lean more heavily on sales, excise, or property taxes to fund government services -- worth factoring in alongside the $0 income tax figure above. Use our sales tax calculator to see how that adds up on a purchase.
Disclaimer: Estimates for educational purposes only. State tax results are approximations based on published bracket data and do not account for all deductions, credits, exemptions, local taxes, or individual situations. Not tax, legal, or financial advice. Consult the Alaska Department of Revenue or a qualified tax professional for guidance specific to your situation.