Tool | October 2016

State-by-State Guide to Taxes on Retirees

Our comprehensive guide to taxes on retirement income, property and purchases, as well as special tax breaks for seniors, in every state.

Alaska

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The Bottom Line
Map of Alaska

Most Tax-Friendly

One of Kiplinger's top ten most tax-friendly states for retirees, the Last Frontier is a true tax haven for retirees. Alaskans pay no state income tax or state sales tax. In addition, the state sends all permanent residents (who have lived there for at least one year) an annual dividend check from the state’s oil wealth savings account. The 2015 distribution was $2,072; 2016's payout is expected to be lower. While Alaska taxes real estate, homeowners 65 and older, or surviving spouses 60 and older, are exempt from municipal taxes on the first $150,000 of the assessed value of their property.

State Sales Tax

Alaska is one of five states with no state sales tax. However, localities can levy sales taxes, which can go as high as 7.5%. But, according to the Tax Foundation, the statewide average is only 1.76%.

Income Tax Range

No state income tax.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Retirement income is not taxed.

IRAs

Retirement income is not taxed.

401(k)s and Other Defined-Contribution Employer Retirement Plans

Retirement income is not taxed.

Private Pensions

Retirement income is not taxed.

Public Pensions

Retirement income is not taxed.

Property Taxes

Although taxing property is the primary method of raising revenues for most of the larger municipalities in the state, smaller municipalities favor a sales tax. This is primarily because the smaller incorporated areas lack a tax base large enough to support the property tax.

The median property tax on Alaska's median home value of $254,500 is $2,987.

Tax breaks for seniors: Homeowners 65 and older (or surviving spouses 60 and older) are exempt from municipal taxes on the first $150,000 of assessed value of their property.

Inheritance and Estate Taxes

There is no inheritance tax or estate tax.