Alaska does not have a state income tax
Alaska is one of nine states with no state income tax on wages, salaries, or other personal income. This means you will not owe Alaska state income tax on money you earn, regardless of how much you make or how long you have lived there. If you work in Alaska or are an Alaska resident, you do not file a state income tax return to the state.
This does not mean you owe nothing to Alaska. The state funds itself through oil revenue, sales tax, and other sources. You may still owe federal income tax to the IRS, and you may owe sales tax on purchases depending on where you live within the state.
If you moved to Alaska from another state or are considering the move, understanding this tax structure helps you plan your finances and know what forms you actually need to file each year.
Key Takeaways
- Alaska residents and workers do not file a state income tax return and do not owe state income tax on wages, salaries, or self-employment income.
- You still owe federal income tax to the IRS even though Alaska has no state income tax.
- Alaska funds state services through oil revenues, sales tax, and other sources rather than income tax.
- If you worked in another state before moving to Alaska, you may owe that state's income tax on income earned while you lived there.
How Alaska funds state services without income tax
Alaska's primary source of state revenue is oil production. The state owns vast oil reserves and receives royalties and taxes from oil companies that extract and sell that oil. This revenue stream has historically been large enough to fund state operations, schools, and infrastructure without needing an income tax.
Alaska also collects sales tax, though the state sales tax rate is lower than in many other states. Some municipalities within Alaska add their own local sales taxes on top of the state rate. Property taxes, business licenses, and other fees make up the remainder of the state budget.
Because oil revenue can fluctuate with global prices, Alaska's budget has faced pressure in years when oil prices drop. However, the state has maintained its no-income-tax policy for decades.
What taxes you do owe as an Alaska resident
Even though Alaska has no state income tax, you still owe federal income tax to the IRS. You file a federal Form 1040 and pay federal tax based on your income, filing status, and deductions — the same as residents of any other state. Your Alaska residency does not change your federal tax obligation.
You may also owe sales tax when you buy goods or services in Alaska. The state sales tax is currently 0% at the state level, but many cities and boroughs add local sales taxes that range from 1% to 7.5%. The rate depends on where you make the purchase. Some items, like groceries, may be exempt from sales tax in certain areas.
If you own property in Alaska, you may owe property tax to your local municipality. Property tax rates vary by location and are set by individual boroughs and cities, not by the state.
If you moved to Alaska from another state
When you move to Alaska, you become an Alaska resident for tax purposes once you establish residency. However, you still owe income tax to your previous state on income you earned while you lived there. If you moved partway through the year, you will file a part-year resident return with your former state for the months you lived there.
For example, if you lived in California from January through June and moved to Alaska in July, you would file a California part-year resident return for January through June income. You would not owe California tax on income earned after you moved, and you would not owe Alaska state income tax on any of your 2024 income.
Your former state's tax department will tell you the important date for filing that part-year return. Many states require it by the same date as a full-year return, typically April 15.
Self-employment income and Alaska taxes
If you are self-employed or run a business in Alaska, you do not owe Alaska state income tax on your business income. You still owe federal self-employment tax and federal income tax on your net business profit.
You may owe sales tax on goods or services you sell, depending on what you sell and where your customers are located. If you sell physical products in Alaska, you typically collect sales tax from customers. If you provide services, sales tax rules vary by location.
You should also check whether your city or borough requires a business license or local business tax. These are separate from state income tax and vary by municipality.
Remote work and Alaska residency
If you work remotely for a company based in another state, you still do not owe that state's income tax once you become an Alaska resident. Your employer should update your tax withholding based on your Alaska address. You owe income tax only to the state where you live, which in this case is Alaska — and Alaska has no state income tax.
However, if you are still considered a resident of your former state (for example, if you own a home there and plan to return), that state may claim you owe tax on your income. Residency rules vary by state. If you are unsure whether you have fully severed ties with your previous state, contact that state's tax department or speak with a tax professional.
Make sure your employer has your correct Alaska address on file so your W-2 reflects your actual state of residence.
Frequently Asked Questions
Do I need to file a state income tax return in Alaska?
No. Alaska has no state income tax, so you do not file a state income tax return with Alaska. You still file a federal return with the IRS if your income is above the filing threshold for your situation.
If I live in Alaska but work in another state, do I owe that state's income tax?
Yes, typically. Most states tax income earned within their borders, regardless of where you live. If you work in Washington but live in Alaska, you would owe Washington state income tax on that income. However, Washington also has no state income tax, so this example would not result in state tax. The rule depends on both your work state and home state.
Does Alaska have sales tax?
Alaska has no statewide sales tax, but many cities and boroughs charge local sales taxes ranging from 1% to 7.5%. The rate depends on where you make your purchase. Some items like groceries are exempt in certain areas.
Can I claim Alaska as my state of residence if I just moved there?
Residency is determined by where you live and your intent to stay. Most states consider you a resident once you move there and establish a home, even if you have not lived there long. However, if you maintain a home in your previous state or plan to return, that state may still claim you as a resident. Contact the Alaska Department of Revenue or your former state's tax department if you are unsure.
What if I earned income in Alaska before I moved there?
You do not owe Alaska state income tax on that income because Alaska has no state income tax. You may owe federal income tax and possibly income tax to the state where you lived when you earned it. Report all income on your federal return regardless of where you earned it.