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Taxes in Alaska
Our research highlights Alaska’s key tax advantages for retirees, including no income tax, no Social Security tax, and senior-friendly property tax exemptions.
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At a glance:
- Alaska is one of the most tax-friendly states for retirees, with no state income tax, no tax on Social Security, and no tax on retirement income.
- The state also has no statewide sales tax, though some local municipalities may impose small sales taxes.
- Property taxes are relatively low, and additional exemptions are available for seniors and qualifying veterans.
One of the most tax-friendly states for retirement, Alaska does not levy income, retirement, or social security taxes. It also boasts a wonderfully low average state and local sales tax.
Below, we explain various state taxes affecting retirement income and your ability to live affordably in Alaska, such as sales tax, retirement tax, and property taxes. We’ve also provided details about tax credits, exemptions, tax relief programs, and retirement-related tax breaks.
For information regarding taxes in other states, see Retirement Taxes by State.
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Alaska Tax Rates
| Sales Tax | None |
| Avg State/Local Sales Tax | 1.82% |
| Gas Tax | $0.0895 per gallon |
| Diesel Tax | $0.0895 per gallon |
| Cigarette Tax | $2.00 per pack |
| Vehicle Rental Tax | 10% on passenger vehicles; 3% on RVs |
| Excise Tax | $2.00 |
| Income Tax | None |
| Property Tax | 1.07% |
| Social Security Tax | None |
| Retirement Tax | None |
Alaska Tax Rates Explained
Alaska Sales Tax
Alaska does not collect state sales tax. However, the average ranges from 0% to 7.50%, depending on the municipality. Alaska ranks 3rd in the nation for average local sales tax rate compared to other states. The “typical” sales tax rates within Alaska range from 2% to 5%. Other local taxes levied include raw fish taxes, hotel/motel “bed” taxes, and liquor and tobacco taxes.
Alaska Income Tax
Alaska does not levy a tax on earned or unearned income. Year-round residents are eligible to receive an annual payment from the Alaska Permanent Fund. Residents apply online for the Permanent Fund Dividend (PFD), which recently ranged from $800 to over $2,000 ($1702). These funds generate a 1099 and are taxable income on federal returns.
Retirement income and military pay are not taxed.
Alaska Property Taxes
Alaska charges a 1.07% property tax, and larger municipalities like Anchorage typically have their own property tax rates. The effective property tax rate is 1.18% on average ($3,136 on a $265,200 home). Municipalities that levy property tax collect between 0.16% and 1.69%.
Homeowners 65 and older are exempt from municipal taxes on the first $150,000 of assessed property value. If the primary homeowner dies, the rule applies to the surviving spouse who is at least 60 years of age.
Veterans with a 50% or more service-connected disability also pay no tax on the first $150,000 of property value.
Alaska Retirement Taxes
Social Security and military pay are exempt. Residents 60 and older can exclude up to $12,500 of pension and other retirement income.
Alaska Inheritance and Estate Taxes
There is no state inheritance tax or estate tax in Alaska.
Visit the Alaska State Assessor Office site for more information about state taxes.