Rocky Mengle
Navigating the complexities of state taxes can be daunting, but understanding Alaska's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Last Frontier State's tax system, from income and sales taxes to property taxes and retirement benefits.
Alaska state tax: Overview
Alaska is one of the nine states with no income tax. In fact, Alaska actually pays legal residents who have lived there for at least one year an annual stipend, called the Permanent Fund Dividend.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Alaska doesn't have a statewide sales tax, but localities can impose their own taxes of up to 9.5%, according to the Sales Tax Handbook.
However, the average sales tax comes in at below 2%, making it one of the states with the lowest sales tax.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Alaska income tax
Alaska has no state income tax.
Alaska sales tax
Alaska is one of five states with no state sales tax. However, localities can levy sales taxes, and you might pay local sales tax on some essentials such as groceries.
Higher rates are found in locations that lack a property tax, but not having to pay property tax might make those higher sales tax rates less painful.
How much are property taxes in Alaska?
In Alaska, the average effective property tax rate is 1.07%, which is slightly high but still lower than in many other states.
Source: Tax Foundation
Alaska retirement taxes
Alaska Property Tax Breaks for Retirees
Alaska Senior Citizen Exemption: 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.
Note: Other residents may qualify to have up to 40% ($75,000 maximum) of their property's assessed value exempt from property taxes.
Alaska gas tax
Gasoline: $0.08 per gallon.
Diesel: $0.08 per gallon.
Source: Sales Tax Handbook
Alaska alcohol and tobacco taxes
Alaska tobacco taxes
Product | Tax Amount |
|---|---|
Cigarettes | $2.00 per pack |
Other Tobacco Products | 75% of wholesale price |
Source: Sales Tax Handbook
Alaska alcohol taxes
Product | Tax Amount |
|---|---|
Wine | $2.50 per gallon |
Beer | $1.07 per gallon |
Liquor | $12.80 per gallon |
Source: Sales Tax Handbook
Alaska estate and inheritance taxes
Alaska is one of the U.S. states with no estate or inheritance taxes.
Related Content
-
Time Is Running Out to Make the Best Tax Moves for 2025Don't wait until January — investors, including those with a high net worth, can snag big tax savings for 2025 (and 2026) with these strategies.
-
4 Smart Ways Retirees Can Give More to CharityFor retirees, tax efficiency and charitable giving should go hand in hand. After all, why not maximize your gifts and minimize the amount that goes to the IRS?
-
If You Do One Boring Task Before Year-End, Make It This OneWho wants to check insurance policies when there's fun to be had? Still, making sure everything is up to date (coverage and deductibles) can save you a ton.
-
Are You Middle-Class? Here's The Most Tax-Friendly State For Your FamilyTax Tips We found the state with no income tax, low property tax bills, and exemptions on groceries and medicine.
-
Social Security Benefits Quiz : Do You Know the IRS Tax Rules?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
How Are I Bonds Taxed? 8 Common Situations to KnowBonds Series I U.S. savings bonds are a popular investment, but the federal income tax consequences are anything but straightforward.
-
New 2026 Tax Change Could Mean More for Your IRA and 401(k) SavingsRetirement Savings Here's how the new IRS inflation adjustments will increase the contribution limits for your 401(k) and IRA in the new year.
-
Capital Gains Tax Quiz: How Well Do You Really Know IRS Investment Tax Rules?Quiz Take our capital gains tax quiz to test your investment taxes knowledge. Learn about loss rules, holding periods, and tax incentives that could impact your savings.
-
6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't)Retirement Taxes Here’s how converting your traditional retirement account to a Roth IRA can boost your nest egg — but avoid these costly scenarios.
-
Could Tax Savings Make a 50-Year Mortgage Worth It?Buying a Home The 50-year mortgage proposal by Trump aims to address the housing affordability crisis with lower monthly mortgage payments. But what does that mean for your taxes?
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
