Alaska does not have a state income tax
Alaska is one of nine states with no state income tax. You will not owe Alaska state income tax on wages, self-employment income, investment returns, or retirement distributions. This applies whether you live in Alaska year-round, work there seasonally, or moved there during the tax year.
The absence of state income tax does not mean Alaska has no taxes. The state funds itself through oil revenue, sales tax, property tax, and other levies. Some Alaska cities and boroughs also charge local income taxes on residents, so your actual tax burden depends on where in Alaska you live.
If you work in Alaska but live in another state, you typically owe income tax only to your state of residence, not to Alaska. If you live in Alaska but work in another state, that other state may still tax your income — you would then owe tax to both your state of residence and your employer's state, though you can usually claim a credit to avoid double taxation.
Key Takeaways
- Alaska collects no state income tax on any type of income, making it one of the lowest-tax states for wage earners.
- Some Alaska cities and boroughs impose their own local income taxes, so check your specific municipality before assuming you owe nothing.
- If you work in Alaska but live elsewhere, you owe income tax to your home state, not to Alaska.
- If you live in Alaska but work in another state, that state can tax your income, and you may owe tax to both states.
- Alaska still collects sales tax, property tax, and other levies; the lack of income tax does not mean the state has no taxes.
Which Alaska cities and boroughs charge local income tax
Not all of Alaska imposes local income tax, but several municipalities do. Anchorage, Juneau, Ketchikan, and Sitka all tax resident income. The rates and rules vary by location — some tax only residents, others tax anyone working within city limits, and some exempt certain types of income.
Anchorage, the largest city, taxes residents at a rate that changes year to year based on the city budget. Juneau and Ketchikan also impose local income taxes on residents. If you live in a smaller town or rural area, you may have no local income tax at all. The only way to know is to contact your city or borough clerk's office or check the municipality's website.
If you move to Alaska or change jobs within the state, ask your employer or your new city whether local income tax applies. Some employers withhold it automatically; others do not, and you would owe it when you file your return.
How the lack of state income tax affects your federal return
Filing your federal income tax return works the same way whether you live in Alaska or any other state. You report all income, claim deductions and credits you are may have access to to, and pay federal tax based on your total income and filing status. Alaska's lack of state income tax does not change your federal tax burden or your federal filing requirements.
You may see a small benefit if you itemize deductions on your federal return. Since Alaska has no state income tax, you cannot deduct state income tax paid — but you also did not pay any. This is neutral for most filers. If you pay local income tax in an Alaska city, you can deduct that on your federal return if you itemize.
Working across state lines: Alaska residents employed elsewhere
If you live in Alaska but work in another state, that state can tax your income. Washington, Oregon, and other neighboring states all tax nonresident income earned within their borders. You would owe income tax to the state where you work, not to Alaska.
You file a nonresident or part-year resident return in the state where you earned the income, reporting only the wages or self-employment income from that state. You also file a resident return in Alaska if you lived there for part of the year, though since Alaska has no income tax, this return may be simple or unnecessary. Some states offer a credit for taxes paid to another state to prevent double taxation, but the rules differ — check with the state where you worked.
If you are self-employed and work remotely from Alaska for a company in another state, you typically owe income tax only to Alaska (which has none) and federal tax. The state where your employer is located generally does not tax remote work performed outside its borders, though a few states have different rules — verify with your employer's state if you are uncertain.
Nonresidents working in Alaska
If you live in another state but work in Alaska, you owe income tax to your home state on all your income, including what you earn in Alaska. Alaska itself will not tax you. Your employer in Alaska will not withhold state income tax because Alaska has none.
You file a resident or part-year resident return in your home state, reporting your Alaska wages along with any other income. Your home state taxes the full amount. Some states offer credits for taxes paid to other states, but since Alaska imposes no income tax, there is no credit to claim. If you worked in Alaska for only part of the year, you may file a part-year resident return in your home state.
Other Alaska taxes you may owe
Alaska's sales tax varies by location. Most of the state has no statewide sales tax, but many cities and boroughs impose their own. Anchorage has a 12% sales tax (combining state and local rates). Juneau has 5.5%. Other areas have different rates or no sales tax at all. Sales tax is charged at the point of purchase and is not something you file on a return — the merchant collects it.
Property tax in Alaska is set by individual boroughs and municipalities. Some areas have high property taxes; others have none. If you own real estate in Alaska, contact your local assessor's office to learn the rate in your area. Homeowners may also may have access to for property tax exemptions or deferrals depending on age, income, or disability — these programs vary by location.
Alaska also taxes certain business activities, fishing income, and other specific sources. If you are self-employed, own a business, or have income from fishing or other specialized sources, research whether Alaska imposes a tax on that activity. The Alaska Department of Revenue website lists all state taxes and who must pay them.
Moving to Alaska for tax reasons
Some people move to Alaska specifically to avoid state income tax. Establishing Alaska residency for tax purposes requires more than just moving there — you must show intent to remain and establish ties to the state. The IRS and Alaska tax authorities look at factors like where you register to vote, where you hold a driver's license, where your family lives, and where you own property.
If you move to Alaska but maintain a home, job, or family in another state, the IRS may determine you are still a resident of that other state for tax purposes. You cannot simply rent an apartment in Alaska for a few months and claim residency if your life and income remain elsewhere. Consult a tax professional before making a move based on tax considerations — the rules are complex and mistakes can result in owing back taxes and penalties.
Frequently Asked Questions
Do I have to file a state income tax return in Alaska?
No. Alaska has no state income tax, so you do not file a state return there. If you live in an Alaska city that charges local income tax, you may file a local return — contact your municipality to confirm. You still file a federal return if your income exceeds the threshold for your filing status.
If I move to Alaska mid-year, do I owe income tax to my old state?
You owe income tax to your state of residence for the part of the year you lived there. If you moved from California to Alaska in June, you file a part-year resident return in California reporting income earned through June, then owe nothing to Alaska. Your home state determines the exact rules for part-year residents — some states tax you on all income earned that year regardless of when you moved.
Does Alaska have a sales tax or property tax?
Alaska has no statewide sales tax, but many cities and boroughs impose local sales taxes ranging from 0% to 12% depending on location. Property tax is also set locally and varies widely. Some areas have high property taxes; others have none. Check your specific city or borough for the rates that apply to you.
Can I claim Alaska as my state of residence if I work there seasonally?
Seasonal work alone does not establish residency. The IRS looks at where you maintain your permanent home, where your family lives, and where you intend to return. If you work in Alaska for six months and live elsewhere the rest of the year, you are likely a resident of your other state for tax purposes. A tax professional can review your specific situation.
What if my employer withholds state income tax by mistake?
Contact your employer's payroll department and explain that Alaska has no state income tax. They should correct the withholding immediately. If they have already withheld money, you can claim a refund on your federal return or ask your employer to issue a corrected W-2. Keep records of the incorrect withholding in case you need to dispute it.