Alaska does not have a state sales tax
Alaska is one of five U.S. states with no statewide sales tax. This means when you buy something in Alaska, you do not pay a state-level sales tax at checkout. However, this does not mean all purchases are tax-free — some Alaska cities and boroughs charge local sales taxes, and certain items are taxed differently than others.
The absence of a state sales tax is one reason Alaska has lower overall tax burden than many states. Instead of sales tax revenue, Alaska funds state government partly through oil revenue and partly through other taxes, including corporate income tax on certain businesses and a tax on oil and gas production.
Key Takeaways
- Alaska has no state sales tax, but some cities and boroughs within Alaska do charge local sales taxes ranging from 0% to 7.5%.
- Where you shop in Alaska determines whether you pay sales tax — the same item costs different amounts in different cities.
- Groceries, prescription medications, and medical equipment are generally not taxed in Alaska, even in cities that have local sales taxes.
- Online purchases and mail orders to Alaska may or may not be taxed depending on the seller's location and Alaska's tax laws at the time of purchase.
Local sales taxes in Alaska cities and boroughs
Even though Alaska has no state sales tax, individual cities and boroughs can set their own local sales taxes. These local rates vary widely. Some Alaska communities have no local sales tax at all, while others charge up to 7.5%. Anchorage, the largest city, charges 3.5% local sales tax. Juneau charges 5%. Fairbanks charges 0%. Ketchikan charges 6%.
The local tax rate depends entirely on where you make the purchase. If you buy something in Anchorage, you pay Anchorage's rate. If you buy the same item in Fairbanks, you pay no local sales tax. This means the total cost of identical purchases can differ significantly depending on which Alaska city you shop in.
Local sales taxes in Alaska explore to most goods and services, though some items are exempt. You can find the current local sales tax rate for a specific Alaska city or borough by contacting that city's tax assessor's office or checking the city's official website.
What is not taxed in Alaska
Groceries and food for home consumption are not subject to sales tax in Alaska, even in cities that charge local sales tax. This includes items like milk, bread, vegetables, and meat purchased at a grocery store. Restaurant meals and prepared foods are taxed differently — they may be subject to local sales tax depending on the city.
Prescription medications and certain medical equipment are also exempt from Alaska sales tax. This includes items like insulin, inhalers, and prescribed medical devices. Over-the-counter medications like pain relievers and cold medicine are generally taxed like other goods.
Clothing and footwear are not taxed in Alaska. This exemption applies in cities with local sales taxes as well, so you do not pay sales tax on shirts, pants, shoes, or coats regardless of where in Alaska you purchase them.
How local sales tax works at the register
When you shop in an Alaska city or borough with a local sales tax, the tax is added at the register just like sales tax in other states. The cashier scans your items, the register calculates the local sales tax based on the city's rate, and you pay the total including tax. You see the tax amount listed on your receipt.
Some items ring up with tax and some do not, depending on what they are. A grocery store receipt in Anchorage might show tax on a magazine but no tax on the milk you bought at the same time. This is because groceries are exempt but magazines are taxed.
If you are unsure whether a specific item will be taxed, ask the cashier before you check out. Different cities sometimes classify items differently, so what is taxed in one Alaska city might not be taxed in another.
Online and mail orders to Alaska addresses
Whether you pay sales tax on online purchases shipped to Alaska depends on the seller and the current tax laws. Some online retailers collect Alaska local sales tax based on the delivery address. Others do not. This varies by company and changes over time as tax laws shift.
If you order something online and it ships to an Alaska address, check the checkout page to see whether sales tax is being added. If tax is charged, it is usually based on the local sales tax rate for your city or borough. If no tax appears at checkout, you typically do not owe sales tax on that purchase.
Mail orders and purchases from out-of-state sellers follow the same pattern. The seller decides whether to collect Alaska sales tax based on their own tax policies and legal obligations. You cannot predict the tax treatment of an online purchase without checking at the time you order.
Comparing Alaska to other states with no sales tax
Alaska is one of five states with no statewide sales tax. The others are Delaware, Montana, New Hampshire, and Oregon. However, each of these states funds government differently and has different local tax rules.
Montana allows some cities to charge local sales taxes, similar to Alaska. Delaware, New Hampshire, and Oregon do not allow local sales taxes at all, so purchases in those states are completely tax-free. This makes Alaska's situation more complex than some other no-sales-tax states — you have to know which city you are in to know what you will pay.
If you are moving to or visiting Alaska from a state with sales tax, remember that the lack of state sales tax does not mean everything is cheaper. Local taxes, property taxes, and other costs vary by location and may offset the savings from no state sales tax.
Frequently Asked Questions
Do I pay sales tax on everything I buy in Anchorage?
No. Anchorage charges 3.5% local sales tax on most items, but groceries, prescription medications, and clothing are exempt. Restaurant meals and prepared foods are taxed. Check your receipt to see which items were taxed.
If I buy something in Fairbanks and take it to Anchorage, do I owe tax?
No. Sales tax is paid at the point of purchase based on where you buy the item, not where you use it. If you bought it tax-free in Fairbanks, you do not owe tax later just because you moved it to Anchorage.
Why does Alaska have no state sales tax?
Alaska funds state government through oil and gas revenue and other taxes rather than sales tax. This is unique to Alaska's economy and history. The state does not rely on sales tax the way most other states do.
Are there any items that are taxed even in Alaska cities with no sales tax?
No. If a city has no local sales tax rate, then purchases in that city are not subject to sales tax. Fairbanks, for example, has 0% local sales tax, so you pay no sales tax on any purchase there, including items that would be taxed in other cities.