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Tool | September 2014

State-by-State Guide to Taxes on Retirees

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Alaska

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The Bottom Line
Map of Alaska

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 2014 dividend of $1,884 is more than double the 2013 dividend of $900. 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

The state does not have a sales tax. However, 104 municipalities impose local sales taxes, which can go as high as 7%. But, according to the Tax Foundation, the statewide average is 1.69%.

Income Tax Range

No state income tax.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

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. Property is assessed at full value. Tax rates are determined locally, up to a maximum of 3% for cities.

Median property tax on the state's median home value of $232,900 is $2,422, according to the Tax Foundation.

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.

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