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Official Tax Guide

Alaska Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Alaska state taxes. Income tax (0%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

State Tax Guide 2025: Alaska

Moving to the Last Frontier? Alaska offers a unique tax landscape that differs significantly from most other U.S. states. This guide breaks down what new residents can expect regarding state and local taxes for the 2025 tax year.

1. Income Tax

Alaska is one of the few states that does not impose a state-level income tax on individuals.

  • Rate: 0%
  • Structure: Neither flat nor progressive, as there is no state income tax to levy.
  • Details: Residents are not required to file a state income tax return for wages, salaries, or investment income. However, you must still file federal income taxes.
  • Permanent Fund Dividend (PFD): While not a tax, eligible residents receive an annual dividend from the state's oil revenue investments. For 2025, the estimated PFD is a significant financial consideration, though it is subject to state legislative approval and varies yearly.

2. Sales Tax

Alaska does not have a statewide sales tax, but local jurisdictions are authorized to levy their own.

  • State Rate: 0%
  • Local Rates: Municipalities and boroughs may impose sales taxes ranging from 0% to 7.5%.
    • Anchorage: 0%
    • Juneau: 5%
    • Fairbanks: 0% (though the Fairbanks North Star Borough has a 2% sales tax)
  • Special Considerations: Some localities tax groceries, while others exempt them. Always check the specific rules of the city and borough where you reside.

3. Property Tax

Property taxes are the primary source of revenue for local governments in Alaska.

  • Overview: Alaska’s effective property tax rate generally falls below the national average. While national averages hover around 1.1%, Alaska’s rate is typically closer to 1.0% or lower, though this varies significantly by borough.
  • Exemptions: Alaska offers exemptions for certain groups, including seniors (65+), disabled veterans, and surviving spouses, though specific eligibility and exemption amounts vary by borough.
  • Assessment: Property is assessed at its full and true value (market value). Tax rates are applied per $1,000 of assessed value.

4. Other Taxes

While income and sales taxes are absent or low, Alaska has specific excise taxes.

  • Gas Tax: Alaska has one of the lowest gas taxes in the nation. As of 2025, the state gas tax is 8 cents per gallon (unchanged since 1971). Local municipalities may add additional taxes, but total fuel costs are often lower than the national average.
  • "Sin" Taxes:
    • Alcohol: Alaska imposes excise taxes on alcohol. The rate is approximately $1.07 per gallon for beer, $1.20 per gallon for wine, and $12.80 per gallon for spirits (distilled spirits).
    • Tobacco: The state cigarette tax is $2.00 per pack. Other tobacco products are taxed at 75% of the wholesale price.
  • Inheritance/ Estate Tax: Alaska does not have a state-level inheritance or estate tax. However, federal estate tax laws still apply.
  • Corporate Income Tax: Alaska does have a corporate income tax, ranging from a bracketed structure (0% to 9.4%), but this generally applies to business entities, not individual wage earners.

5. Retiree Taxes

Alaska is highly favorable for retirees due to the lack of state income tax.

  • Retirement Income: Social Security benefits, pension income, and 401(k)/IRA distributions are not taxed by the state of Alaska.
  • Other Income: Investment income and capital gains are also exempt from state taxation.
  • Note: While the PFD (Permanent Fund Dividend) is available to residents (including retirees who meet residency requirements), it is considered taxable income on your federal return.

6. Comparison to Neighbors

Here is how Alaska’s tax structure compares to its neighboring states (Washington, Yukon, British Columbia, and the Arctic Circle regions):

  • Vs. Washington: Washington has a high state sales tax (6.5% + local taxes) and no income tax. Alaska is generally more tax-friendly regarding sales tax, though property taxes may be comparable depending on the location.
  • Vs. Canada (Yukon/BC): Canada has significantly higher income taxes (federal and provincial) and higher sales taxes (GST/HST). Alaska is much more tax-friendly for high-income earners compared to its Canadian neighbors.
  • Vs. Lower 48 States: Alaska is unique. It lacks the income tax found in 41 other states and the high sales tax found in many others. However, the cost of goods and transportation (shipping) can offset these tax savings.

Disclaimer: Tax laws change frequently. The information provided in this guide is for general informational purposes only and is not a substitute for professional tax advice. Consult a CPA or tax professional familiar with Alaska laws before making financial decisions.