Alaska Paycheck Calculator – Current Tax Year
Every other state in this calculator series either never had an income tax or still has one. Alaska did something no other state has ever done: it had a real, working personal income tax, then tore it out entirely in 1980 and never brought it back. On top of that, Alaska residents get something no other state offers at all — an annual cash dividend just for living there.
Test a Raise, New Job, or Pay Cut
With no state tax to recalculate, a raise in Alaska flows through almost entirely on the federal and FICA side.
The Only State That Tried Income Tax and Walked Away From It
Every no-income-tax state covered elsewhere in this calculator series shares one thing in common: none of them have ever actually had a personal income tax to begin with. Alaska breaks that pattern entirely. Alaska’s territorial legislature created a real, working income tax back in 1949, taxing residents at 10% of their federal tax liability, and by 1975 that had grown into an independent graduated system with rates climbing as high as 14.5%. Then the Trans-Alaska Pipeline finished construction, North Slope oil revenue surged, and in 1980 the state legislature repealed the entire income tax. It has never come back. Alaska remains the only state in American history to have wholly eliminated a broad-based personal income tax it once collected.
A Genuinely Different Kind of “No Tax” State
Alaska’s setup also differs from the other four no-sales-tax states in a way most people never notice. Oregon, Montana, New Hampshire, and Delaware ban local sales tax along with the statewide one. Alaska doesn’t. Individual boroughs and cities can, and many do, charge their own local sales tax of up to roughly 7.85%, even though there’s nothing at the state level. Juneau charges around 5%. Anchorage charges nothing at all. It genuinely depends on where in the state you live, which makes Alaska the only state combining zero state sales tax with locally variable sales tax, rather than zero at every level.
- No state income tax – repealed in 1980, the only state to ever do this to an existing broad-based tax.
- No local income tax either – state law specifically reserves income taxation to the state level, and the state currently imposes none.
- No statewide sales tax, but local sales tax exists – up to roughly 7.85% depending on the borough or city.
- An annual cash dividend – the Permanent Fund Dividend, paid to eligible residents from oil-wealth investment earnings.
- The PFD is federally taxable – it must be reported on your federal return, even though Alaska itself never taxes it.
| Deduction | Rate | Applies To |
|---|---|---|
| Federal Income Tax | 10%-37% | Taxable income after deductions |
| Alaska State Tax | 0% | Repealed in 1980, not currently reinstated |
| Local Income Tax | 0% | Reserved to the state by law; state imposes none |
| Social Security | 6.2% | Income up to the annual wage base |
| Medicare | 1.45% | All earned income, plus 0.9% for high earners |
Why the Income Tax Question Hasn’t Fully Gone Away
Here’s something genuinely worth knowing if you’re settling in Alaska long-term: the state’s oil-driven revenue model has been under real strain in recent years, and the conversation about reinstating some form of broad-based tax keeps resurfacing. One of the original co-authors of the Permanent Fund Dividend program has publicly called for bringing back a personal income tax, arguing the current model can’t scale as oil revenue declines. Separately, the governor has floated a seasonal statewide sales tax proposal tied to a broader fiscal package. None of this is law yet, and Alaska’s tax-free paycheck remains very real today, but it’s a fair sign that the “Alaska never taxes your paycheck” assumption is being actively debated at the state capitol, not settled permanently.
Alaska Paycheck FAQs
Did Alaska ever have a state income tax?
Yes. Alaska’s territorial legislature enacted a personal income tax in 1949 that grew into a graduated system with rates up to 14.5% by 1975, before being fully repealed in 1980 following the oil boom from the Trans-Alaska Pipeline.
Could Alaska bring back an income tax?
There is no current law to do so, but the idea resurfaces periodically as oil revenue has declined, including recent public calls from a co-author of the Permanent Fund Dividend program and separate gubernatorial proposals around sales tax.
Does Alaska have a sales tax?
There is no statewide sales tax, but unlike the other no-sales-tax states, Alaska allows individual boroughs and cities to levy their own local sales tax, ranging from 0% to roughly 7.85% depending on location.
What is the Alaska Permanent Fund Dividend?
It’s an annual cash payment made to eligible Alaska residents from the investment earnings of the state’s oil-wealth Permanent Fund. The amount varies year to year and must be reported as taxable income on your federal return, though Alaska itself does not tax it.
Can a city in Alaska create its own income tax?
No, state law specifically reserves income taxation to the state level, and local governments are prohibited from imposing their own income tax even though the state currently collects none itself.
How accurate is this Alaska paycheck calculator?
Since there is no state income tax, this tool’s accuracy depends entirely on standard federal tax brackets and current FICA rates, both calculated using the same formulas used nationwide.
Does a 401(k) contribution still help in Alaska?
Yes, it still reduces your federal taxable income and lowers your federal withholding, since the entire tax benefit comes from the federal side when there is no state income tax to also reduce.
Who qualifies for the Permanent Fund Dividend?
Generally, you must have been an Alaska resident for the entire prior calendar year and intend to remain a resident, with specific allowances for students temporarily living elsewhere for education.
Related Paycheck and Take-Home Pay Calculators
Comparing Alaska against another no-tax state? These calculators share the same verified, formula-based methodology:
This calculator provides general estimates based on standard federal tax brackets and current FICA rates for informational purposes only. The Permanent Fund Dividend figure is user-entered and illustrative; actual PFD amounts are set annually by the State of Alaska and vary based on fund performance and legislative decisions. The PFD is taxable on your federal return, which this calculator does not separately recalculate. None of this constitutes tax or financial advice. Confirm current figures with the Alaska Department of Revenue, the Permanent Fund Dividend Division, or a licensed tax professional.