Alaska does not levy a state income tax on individual wages, salary, or investment income.
Tax Overview
Alaska has never imposed a state income tax since achieving statehood in 1959. It is also one of only five states with no state-level sales tax. The state funds its government primarily through oil and gas revenue, including severance taxes on petroleum production and investment earnings from the Alaska Permanent Fund.
Other Taxes in Alaska
Local governments levy property taxes, which are the primary funding source for local services. Rates vary by municipality and borough.
While there is no state sales tax, some local jurisdictions impose their own sales taxes, typically ranging from 1% to 7.5%.
Alaska levies severance taxes on oil and gas production, which historically have been the state's largest revenue source.
The Permanent Fund Dividend pays eligible residents an annual dividend from oil wealth investment earnings. The PFD is taxable on your federal return.
Federal Taxes Still Apply
While Alaska does not levy a state income tax, residents are still subject to federal income tax, FICA taxes (Social Security and Medicare), and self-employment tax. Use our Federal Income Tax Calculator to estimate your federal tax liability.