Go to Retiree Tax Map Alaska Add to State Compare List | View List View State Compare List (0) selected | Compare up to 5 The Bottom Line 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 2017 payout is be $1,100, well off the 2015 peak of $2,072.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.IRAsRetirement income is not taxed.401(k)s and Other Defined-Contribution Employer Retirement PlansRetirement income is not taxed.Private PensionsRetirement income is not taxed.Public PensionsRetirement 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 $250,000 is $2,956.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. Vehicle Taxes Municipalities determine the sales tax for vehicles and can also choose to levy an annual registration tax. This registration tax is separate from the vehicle's registration fee and is based on vehicle class and model year. For example, a two-year-old car in Anchorage would have a motor vehicle registration tax of $150. Inheritance and Estate Taxes There is no inheritance tax or estate tax.