Alaska State Income Tax Overview

Alaska is one of a small number of states that does not impose a personal income tax on residents. If you live or work in Alaska, you do not file an Alaska state income tax return, and there is no Alaska equivalent to a Form 1040.

That said, no state income tax does not mean no taxes. Alaska funds state and local government through other revenue sources, including sales taxes in some areas, property taxes, and taxes tied to natural resource production. Understanding how Alaska collects revenue, and how that compares to other states, is important whether you are moving to Alaska, already living in the state, or considering relocating elsewhere.

This page explains how Alaska's tax system works, what taxes residents do and do not pay, and how Alaska compares to other states from a tax perspective.

Does Alaska Have a State Income Tax?

No. Alaska does not have a state-level personal income tax.

Residents of Alaska do not pay state income tax on wages, salaries, self-employment income, retirement income, or investment income. There is also no Alaska state income tax return to file and no state income tax withholding taken from paychecks.

This is not a temporary policy or a tax incentive that changes year to year. Alaska has not imposed a personal income tax for decades, and it remains a no-income-tax state.

It is important to note that this applies only to state income taxes. Alaska residents are still required to file and pay federal income taxes with the IRS, just like residents of every other state.

Alaska Permanent Fund Dividend (PFD)

In addition to not taxing personal income, Alaska is unique in that it pays an annual dividend to eligible residents through the Alaska Permanent Fund Dividend (PFD) program.

The PFD is funded by earnings from the Alaska Permanent Fund, which is supported largely by revenue from oil and other natural resource activity. Each year, a portion of the fund's earnings may be distributed directly to qualifying Alaska residents.

The dividend amount is not fixed and can vary significantly from year to year based on investment performance and legislative decisions. Residents must meet eligibility requirements and apply during the annual application period to receive a payment.

It is important to note that while Alaska does not tax the dividend at the state level, the Alaska Permanent Fund Dividend is generally considered taxable income for federal income tax purposes.

The PFD program is a notable feature of Alaska's tax and revenue system, but it should not be viewed as guaranteed income or a substitute for long-term tax planning.

How Alaska Raises Revenue

Alaska's lack of a personal income tax does not mean the state operates without revenue. Instead of taxing wages and salaries, Alaska relies more heavily on revenue from natural resources, along with local taxes and fees, to fund state and local government.

Understanding this trade-off is important, especially for people moving to Alaska from high–income-tax states.

Sales and Use Taxes

Alaska does not impose a statewide sales tax.

• Some cities and boroughs levy local sales taxes.
• Sales tax rates and rules vary by location.
• Residents may pay little or no sales tax depending on where they live.

This makes Alaska unique among no-income-tax states.

Property Taxes

Property taxes in Alaska are imposed at the local level.

• Rates vary by borough and municipality.
• Property taxes help fund local services such as schools, public safety, and infrastructure.
• Property taxes are often the primary local tax for homeowners.

For homeowners and long-term residents, property tax planning matters.

Corporate and Business Taxes

While individuals are not subject to state income tax, Alaska does collect revenue from businesses.

• Alaska imposes a corporate income tax on certain businesses operating in the state.
• Natural resource industries play a significant role in business tax revenue.
• Other businesses may be subject to industry-specific taxes, fees, and licensing requirements.

This distinction is important for business owners and entrepreneurs considering Alaska.

Other State and Local Revenue Sources

Alaska also funds government operations through:

• Oil and gas production taxes
• Severance-related taxes and royalties
• Fuel, alcohol, and tobacco taxes
• Various state and local fees and assessments

Revenue from natural resources plays a central role in Alaska's tax structure.

How long do you have to live in Alaska to avoid taxes?

Residency for tax purposes is demonstrated by whether or not an individual has taken steps to move into Alaska, and, sever residency in a previous state or country. You may still need to file a full-year, part-year, or non-resident income tax return in your current state for the year you move to Alaska.

If you are considering moving to Alaska, remember that personal income taxes are just part of the overall tax burden. In the state of Alaska, however, the overall cost of living is relatively low compared to other high tax states such as California, New Jersey, and New York.

Bottom line: Alaska relies far less on income and consumption taxes than most states. Instead, it funds government largely through natural resource revenue and local taxation. While this structure can be advantageous for residents, it does not eliminate all taxes.

Last updated: January 17, 2026

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