Alaska Tax Rates

This post provides an overview of the primary taxes levied at the state level in Alaska. The information contained here is intended for general reference. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Alaska does not impose a state-level individual income tax. This is a key distinction that makes Alaska an outlier among U.S. states.

  • No Personal Income Tax: Residents are not required to pay state tax on wages, salaries, investment income, or other forms of personal income.
  • Permanent Fund Dividend (PFD): Instead of an income tax, Alaska provides an annual dividend to qualified residents from the state’s Permanent Fund, which is funded by oil revenue.

Sales and Use Tax

Alaska does not levy a statewide sales tax. However, local municipalities are permitted to impose their own sales taxes.

  • Local Sales Tax: Many cities, boroughs, and special jurisdictions in Alaska levy local sales taxes. These rates vary significantly, ranging from 1% to 7.5%.
  • Goods and Services: The local sales tax applies to most retail sales of tangible personal property and some services within the taxing municipality.
  • Use Tax: Corresponding local use taxes are typically imposed on goods purchased outside the municipality but brought in for use or consumption, preventing residents from circumventing the local sales tax.

Property Tax

The state of Alaska does not collect a statewide property tax, but property taxes are a major source of revenue for local governments (boroughs and cities).

  • Local Jurisdiction: Property tax rates are set by local taxing jurisdictions.
  • Exemptions: State law allows boroughs to offer a mandatory $150,000 exemption on the assessed value of a primary residence for residents who are 65 or older, or disabled veterans. Some municipalities may offer additional exemptions.
  • Assessment: Property is generally assessed at its full and true value, which is equivalent to its market value as of January 1 of the assessment year.

Corporate Income Tax

Alaska imposes a state corporate income tax on the taxable income of corporations that are derived from sources within the state.

  • Progressive Rate: The tax structure is progressive, with rates ranging from 0% to 9.4%.
  • Top Rate: The top marginal rate of 9.4% applies to corporate income over $240,000.
  • Apportionment: For multi-state corporations, Alaska uses the three-factor formula (property, payroll, and sales) to apportion income to the state, with sales typically being double-weighted, to determine the portion of income subject to the state tax.

Unique Taxes: Petroleum and Excise Taxes

Given the state’s natural resource wealth, taxes related to petroleum extraction are a crucial and unique source of state revenue.

  • Petroleum Production Taxes: Alaska levies various taxes on oil and gas production, including the Oil and Gas Production Tax. This tax is calculated based on the gross value of the oil or gas produced, after certain statutory deductions are applied. These taxes are highly complex and fluctuate with the price of oil.
  • Excise Taxes: The state imposes excise taxes on specific products. Examples include:
    • Motor Fuel Tax: A tax is levied on gasoline and other motor fuels.
    • Cigarette Tax: Alaska has one of the highest cigarette taxes in the nation, currently $2.00 per pack of 20 cigarettes.
    • Alcoholic Beverage Tax: Taxes are imposed on alcoholic beverages based on volume.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.