Alaska Income Tax Calculator
Alaska is the only state in America where the government pays you to live there — and charges zero income tax on what you earn. The 2025 Alaska Permanent Fund Dividend is $1,000 per qualifying resident, including children. A family of four receives $4,000 while paying $0 in Alaska state income tax on any income — wages, Social Security, pensions, dividends, or capital gains. Built on North Slope oil wealth and a constitutionally protected $86 billion sovereign wealth fund, Alaska’s tax picture is unlike any other state in the country.
Calculate your federal income tax & FICA
Alaska charges zero state income tax. Your only income-based taxes are federal. Enter your income below to see your exact take-home pay as an Alaska resident.
Alaska Income Tax: The Only State That Pays You to Live There
Every other state in America either charges a flat income tax, a progressive income tax, or no income tax — but still asks nothing back. Alaska does something no other state in the country has ever done: it writes its residents an annual check. The 2025 Alaska Permanent Fund Dividend of $1,000 per eligible resident — $4,000 for a family of four — is not a rebate on taxes paid. It is a distribution from a constitutionally protected sovereign wealth fund built on North Slope oil royalties, paid to every qualifying Alaskan simply for being there. Combined with zero state income tax, no statewide sales tax, and no estate or inheritance tax, the financial arithmetic for many Alaska residents represents a genuinely unique position: the state adds to your income rather than subtracting from it. The federal government still taxes your wages, your PFD payment, and your retirement income as it does for residents of every state. But Alaska’s contribution to your tax burden is negative — a payment out, not a bill in.
How North Slope Oil Transformed Alaska’s Tax System — and Created the PFD
Alaska’s relationship with oil began seriously in 1968 when Arco and Humble Oil (later Exxon) confirmed the Prudhoe Bay reserve — the largest oil field ever discovered in North America. Construction of the Trans-Alaska Pipeline System began in 1974 and oil started flowing in June 1977. Almost immediately, the state faced a question it had never confronted: what to do with enormous, finite resource revenues that would eventually run out. Governor Jay Hammond proposed, and voters approved in 1976, a constitutional amendment (Article IX, Section 15) creating the Alaska Permanent Fund — a savings account into which at least 25% of all mineral lease royalties, rentals, and bonuses would be deposited. The Fund’s principal is constitutionally protected and cannot be spent even by a legislative majority; only the investment earnings can be appropriated. By 2025, the Fund had grown to over $86 billion — a per-capita endowment that exceeds the sovereign wealth funds of many nations relative to their populations. In 1980, with oil revenues making the personal income tax unnecessary, Governor Hammond signed legislation repealing Alaska’s personal income tax effective retroactively to tax year 1979. The first PFD was distributed in 1982 at $1,000 per person. What began as a savings mechanism became, over four decades, the foundational expression of Alaska’s unique relationship between its citizens and its natural resources.
The Federal Tax Catch on Your PFD — What Most New Alaskans Miss
The Permanent Fund Dividend has one important caveat that catches many new Alaska residents by surprise: while Alaska itself charges no income tax on the PFD, the Internal Revenue Service does. The PFD is considered taxable ordinary income for federal purposes and must be reported on your federal tax return as “other income” on Schedule 1 (Form 1040), Line 8g. The Alaska Permanent Fund Dividend Division issues a Form 1099-MISC (Box 3) to all PFD recipients. The entire PFD amount must be reported — even if a portion was garnished, donated through Pick.Click.Give., or assigned elsewhere. Children who receive a PFD must also have that income reported — either on their own return (if they have sufficient income to require filing) or on the parent’s return using IRS Form 8814. At a 22% federal marginal rate, the federal tax on a $1,000 PFD is approximately $220 — leaving a net benefit of roughly $780 per person after federal taxes. For a family of four in the 22% bracket, the $4,000 combined PFD translates to approximately $3,120 in net income after federal taxes, with $0 owed to Alaska itself. For taxpayers in lower federal brackets, the after-tax PFD is higher — at the 12% bracket, a $1,000 PFD costs only $120 in federal tax.
Alaska vs. Washington, Oregon, and California: The Pacific Cost Comparison
Alaska is often compared to the Pacific states because of its Pacific coastal identity, its fishing industry connections, and the migration patterns between it and Seattle in particular. The tax comparison is stark. Washington state has no income tax but a 6.5% statewide sales tax. Oregon has no sales tax but income tax rates running from 4.75% to 9.9%. California taxes income at rates from 1% to 13.3% on the highest earners — the highest state income tax top rate in the country — plus an 8.84% corporate rate and a 7.25% base sales tax. A software engineer earning $175,000 who moves from San Francisco to Anchorage would eliminate approximately $12,000–$15,000 in California state income tax annually, while also receiving a $1,000 PFD payment — a combined swing of $13,000–$16,000 in after-tax income from state and local tax reduction alone. The cost of living in Anchorage is higher than most California cities outside of San Francisco and Los Angeles, but for many remote workers whose employers pay San Francisco wages and who can live anywhere, the Alaska tax advantage is compelling and growing. The rise of remote work has accelerated this calculus — Alaska has seen meaningful in-migration from tech workers based in Seattle and the Bay Area since 2020.
Is Alaska a Good State for Retirees? The Complete Tax Picture
For retirees, Alaska presents both a compelling opportunity and practical considerations. On the tax side: zero state income tax on Social Security, zero state tax on pension income, zero state tax on 401(k) and IRA distributions, zero state tax on investment dividends and capital gains, and a $1,000 annual PFD payment per eligible resident — $2,000 for a couple — simply for residing in the state. There is no estate tax and no inheritance tax, meaning wealth transfers to heirs face only federal estate tax. A retired couple drawing $80,000 annually from IRA distributions, Social Security, and a pension owes Alaska $0 on all of it — and receives $2,000 in PFD payments. The practical considerations are significant: Alaska has the highest cost of living of any US state, particularly for food, heating fuel, and transportation in non-road-connected communities. Property taxes in Anchorage and Fairbanks average around 1.3% effective rate. Winters are extreme in the interior. Healthcare access outside major cities is limited. Many retirees who choose Alaska do so for its extraordinary outdoor environment, the fishing and hunting opportunities, and the sense of frontier that it offers — not just for the tax advantages. But for those who embrace Alaska’s lifestyle, the combination of zero income tax, annual PFD, and no death taxes makes the financial case genuinely strong.
Low-Competition Keyword Terms to Know: Alaska Tax Planning in 2025
Several specific Alaska tax planning situations are frequently searched but rarely answered well. For remote workers: Alaska residency requires genuine domicile — simply establishing a PO box or mailing address in Alaska does not create Alaska residency for PFD or tax purposes. Your employer’s state may have its own withholding requirements if you work remotely for an out-of-state company; establishing Alaska residency does not automatically eliminate other states’ right to tax income earned from their businesses. For investors: Alaska has no state capital gains tax, no state dividend tax, and no state interest tax — all investment income is free of Alaska state taxation. For oil and gas workers: income earned from Alaska Slope operations is subject to federal tax but not Alaska individual income tax, making North Slope work financially advantageous compared to Texas or North Dakota (both of which also have no income tax, but do not provide PFD payments). For military families stationed in Alaska: military pay is subject to the same federal tax rules as elsewhere; Alaska charges no state tax on military income because it charges no state tax on any individual income, making Alaska assignments particularly favorable compared to high-tax states like California (home to many major military installations).
Frequently Asked Questions — Alaska Income Tax 2025
No. Alaska has no state individual income tax of any kind. This applies to wages, salaries, Social Security, pensions, IRA and 401(k) distributions, investment income, capital gains, dividends, military retirement pay, and every other form of individual income. Alaska also has no statewide sales tax. No Alaska state income tax return is required — Alaska residents only file federal returns with the IRS.
The 2025 Alaska Permanent Fund Dividend (PFD) is $1,000 per eligible resident, as set by the Alaska Legislature through House Bill 53. This applies to every qualifying resident including children. A family of four qualifying residents would receive $4,000 total. The PFD is paid in October. To be eligible, an applicant must have been an Alaska resident for the entire calendar year 2024. The PFD is taxable federally (Form 1099-MISC) but free of Alaska state tax — because Alaska has no income tax.
Yes — the PFD is taxable for federal income tax purposes. It must be reported on your federal return as other income on Schedule 1 (Form 1040), Line 8g. The Alaska PFD Division issues Form 1099-MISC (Box 3) to all recipients. The entire amount must be reported even if garnished or donated. Alaska itself charges no tax on the PFD because it has no income tax.
Alaska has no statewide sales tax — one of only five US states without one. However, local municipalities may levy their own sales taxes: Juneau charges 5%, Sitka and Ketchikan charge 5%, Wasilla charges 4%, Palmer charges 3%. Anchorage and the Fairbanks borough charge 0% local sales tax. The average local rate across all Alaska municipalities is approximately 1.76%.
Alaska residents pay federal income tax (10%–37%) and FICA payroll taxes (6.2% Social Security on wages up to $176,100, plus 1.45% Medicare). At the local level: sales taxes where applicable (0% in Anchorage; up to 7.5% in some communities); property taxes averaging approximately 1.18% effective rate; and various excise taxes on fuel, alcohol, and tobacco. No state income tax of any kind.
Alaska repealed its personal income tax in 1980, effective retroactively to the 1979 tax year. Alaska had enacted an income tax in 1949 as a territory. After Prudhoe Bay oil started flowing through the Trans-Alaska Pipeline in 1977 and revenues transformed the state’s fiscal position, the income tax became unnecessary. Governor Jay Hammond signed the repeal in 1980. Since 1980, Alaska has had no individual income tax.
Methodology: Alaska has no individual state income tax per Alaska Department of Revenue; no AK state return is required. Federal calculations use 2025 IRS tax brackets, standard deduction ($15,750 single / $31,500 MFJ / $23,625 HOH), and Child Tax Credit rules. FICA uses 2025 SS (6.2% to $176,100) and Medicare (1.45% + 0.9% additional) per IRS.gov. PFD: 2025 amount is $1,000 per eligible resident per Alaska PFD Division and HB 53. Federal tax on PFD is estimated using the filer’s marginal federal rate — actual tax may differ based on total income, deductions, and credits. Local sales tax rates sourced from municipal tax schedules and may change. Property tax uses 1.18% average effective rate — actual rates vary significantly by borough. Neighbor state comparisons use simplified calculations without state-specific deductions or exemptions. This tool is for planning purposes only. Last reviewed: June 2026.