Alaska state taxes at a glance
| Individual income tax | No broad individual income tax on wages |
|---|---|
| Rate structure | No individual income tax and no statewide sales tax. The Permanent Fund Dividend is not taxed by Alaska but is taxable on your federal return. |
| Tax agency | Alaska Department of Revenue, Tax Division |
| Main individual return | None for individuals (federal return only). The Permanent Fund Dividend is reported on your federal Form 1040. |
| Local income taxes | No local income taxes. Many municipalities levy their own sales taxes and some levy property taxes. |
| Sales tax | No statewide sales tax. About a hundred municipalities levy local sales taxes, with rates from roughly 1% to 7% according to the state’s community affairs office; rates are set locally and can be stacked by borough and city. |
| Property tax | No general statewide property tax on homes. Only some boroughs and cities levy a property tax (the state’s assessor reports that only 24 municipalities do), and the state taxes oil and gas property separately. |
| Retirement & Social Security | No state income tax, so Social Security and retirement income are not taxed by Alaska. |
Verify current-year figures: state rates, brackets, credits and filing rules change. Treat this page as a starting orientation and confirm details on the Alaska Department of Revenue, Tax Division website.
How Alaska income tax works
Alaska is one of a small group of states with no individual income tax, and it is also one of only five with no statewide sales tax (Tax Foundation lists Alaska, Delaware, Montana, New Hampshire and Oregon). The state funds most of its budget from natural-resource revenue, mainly oil and gas, and from taxes on resource and corporate activity rather than on wages. For a typical employee, your Alaska paycheck shows federal income tax, Social Security and Medicare, plus state unemployment-related payroll items, but no state income tax line.
The Alaska Permanent Fund Dividend (PFD) is the feature most people ask about. Alaska does not tax it, but the IRS treats it as taxable income: the full amount, even if part was garnished, goes on Schedule 1 (Form 1040), line 8g, for adults and, depending on the amount, for a child’s dividend. The state’s PFD division reported the 2025 dividend at $1,000, so check the PFD site for the amount that applies to the year you are filing. If you want to understand how unusual income like this fits into a return, our complete filing guide walks through the basics.
Local governments fill the gap. Alaska’s state law lets municipalities decide whether to levy sales, use and property taxes, and the state’s Division of Community and Regional Affairs reports roughly 110 municipalities with a sales tax, ranging from about 1% to 7% (Tax Foundation’s midyear 2026 data show a maximum local rate near 7.85% where several layers apply). Because there is no uniform state rate, the same purchase can be taxed very differently in Anchorage, Juneau or a small village.
Filing your Alaska return and free options
Alaska residents file only a federal return unless they earned income in another state. That makes the free-filing question purely federal: see our free filing hub, including VITA free tax help. If you are comparing software, you can usually skip any paid “state return” add-on for Alaska. If you worked in another state, for example on a seasonal job in the Lower 48, you may owe a nonresident return there.
The PFD is the one Alaska-specific line item. The PFD division does not give tax advice but publishes the dividend amount and the state’s tax identification number for reporting. Because the dividend is not accompanied by a Form 1099 in the way wages are accompanied by a W-2, keep your PFD statement with your tax records; it helps if the IRS compares your return against reported amounts.
For the federal side, see our guides to free federal filing options and the complete guide to filing taxes.
Things Alaska residents often ask about
- PFD is federally taxable: report the whole dividend on Schedule 1, line 8g, even if some was garnished for child support or debts.
- Local sales tax: look up the rate for your own city or borough; rates are set locally and can differ from the next town.
- Property tax is local and optional: some boroughs and cities levy none. Check your municipality’s assessor.
- No state refund to track: “Alaska tax refund” searches usually mean your federal refund; use the IRS refund tool.
- Seasonal and remote work: income earned physically in another state can still be taxed there.
Official Alaska links
- Alaska Department of Revenue: Tax Division
- Alaska PFD: tax information
- Alaska Tax Facts (Division of Community and Regional Affairs)
- Federation of Tax Administrators: State tax agencies
Frequently asked questions
Does Alaska have a state income tax?
No. Alaska has no individual income tax and no statewide sales tax. Local governments may levy sales and property taxes.
Is the Alaska Permanent Fund Dividend taxable?
Not by Alaska, but yes for federal income tax. Report the full amount on Schedule 1 (Form 1040), line 8g.
Do I need to file a state tax return in Alaska?
There is no Alaska individual income tax return. You file a federal return if you meet the federal filing requirements, and a return in another state if you earned income there.
General information only — not tax, legal or financial advice. Tax figures change every year; verify the current numbers at IRS.gov or with a qualified professional. Read the full disclaimer.