Alaska is the only state that levies neither an individual income tax nor a statewide sales tax. It is also the only state where about a hundred municipalities levy a sales tax of their own — which means "Alaska has no sales tax" is true of the state and false of a great many Alaskans.
The Department of Revenue's own Personal Income Tax program page states it directly: the state does not have an individual income tax, and therefore no employee withholding for state income tax is required.
A single filer earning $85,000 in Alaska takes home $68,628.
A note before you start. This is general education, not tax advice. Federal figures are tax year 2026, from IRS Revenue Procedure 2025-32 and the Social Security Administration; Alaska's position comes from this site's own sourced 50-state dataset, which cites the Alaska Department of Revenue Tax Division directly. Every dollar figure is computed by the same engine the site's calculators use, on a single filer taking the federal standard deduction with no dependents or pre-tax deferrals unless stated. Local sales tax and cost of living are discussed qualitatively — both vary enormously by community.
1. What Alaska takes from a paycheck: nothing
| Amount on $85,000 | |
|---|---|
| Gross salary | $85,000 |
| Federal income tax | −$9,870 |
| Social Security (6.2%) | −$5,270 |
| Medicare (1.45%) | −$1,233 |
| Alaska income tax | $0 |
| Take-home | $68,628 |
Across incomes:
| Salary | Alaska tax | Take-home |
|---|---|---|
| $30,000 | $0 | $25,285 |
| $45,000 | $0 | $38,338 |
| $60,000 | $0 | $50,390 |
| $85,000 | $0 | $68,628 |
| $120,000 | $0 | $93,250 |
| $175,000 | $0 | $130,879 |
No state return, no withholding line, no bracket table to go stale.
See what your own salary leaves you in Alaska2. Filing jointly
The single-filer figures above are the ones most often quoted. Here is the same salary as a married couple's sole income, filing jointly:
| Salary | Single take-home | Joint take-home | Difference |
|---|---|---|---|
| $45,000 | $38,338 | $40,278 | +$1,940 |
| $85,000 | $68,628 | $72,658 | +$4,030 |
| $120,000 | $93,250 | $100,780 | +$7,530 |
| $175,000 | $130,879 | $140,773 | +$9,894 |
All of that difference is federal. In a state with graduated brackets, part of the joint-filing benefit comes from the state widening its own brackets for married couples — Oregon and Minnesota both do. In Alaska there is no state layer to widen, so the entire gap is the federal standard deduction doubling and the federal brackets widening.
That has one consequence worth naming: the joint-filing benefit is the same dollar amount in Alaska as in every other no-income-tax state, and smaller than in most taxing states. If you are comparing a move on the strength of filing jointly, the comparison is federal-versus-federal plus whatever the other state adds.
As a share of gross, the total tax rate:
| Salary | Single | Joint |
|---|---|---|
| $45,000 | 14.81% | 10.49% |
| $85,000 | 19.26% | 14.52% |
| $120,000 | 22.29% | 16.02% |
| $175,000 | 25.21% | 19.56% |
These are effective rates, not marginal ones — the share of the whole salary that leaves, not the rate charged on the last dollar. The two get confused constantly, and the effective rate is the one that tells you what you can spend.
3. What the paycheck actually looks like
Annual figures are useful for comparison and useless for budgeting. On $85,000 as a single filer in Alaska:
| Pay schedule | Gross per cheque | Net per cheque |
|---|---|---|
| Weekly (52) | $1,634.62 | $1,319.76 |
| Biweekly (26) | $3,269.23 | $2,639.52 |
| Semi-monthly (24) | $3,541.67 | $2,859.48 |
| Monthly (12) | $7,083.33 | $5,718.96 |
Biweekly and semi-monthly are not the same thing, and the difference catches people out. Biweekly is 26 cheques a year — every other Friday — so two months in the year contain three paydays. Semi-monthly is 24 cheques, on fixed dates such as the 15th and the last day, so every month contains exactly two.
The annual total is identical. The monthly cash flow is not. A biweekly earner budgeting on "two paycheques a month" is under-counting by two cheques a year, which on $85,000 is $5,279 that arrives in two windfall months and is easy to spend without noticing.
Three more things a real pay stub adds that the table above does not:
Health insurance premiums, if taken pre-tax under a Section 125 plan, come off before tax and reduce FICA wages as well. A $400-a-month premium is $4,800 a year that never appears as taxable income.
Retirement deferrals reduce federal taxable income but not FICA wages, so the saving is your federal rate only.
Withholding is an estimate, not the tax. Your employer withholds based on the W-4 you filed. Over-withholding produces a refund; under-withholding produces a bill. Neither changes what you actually owe, which is what the figures above show.
Because Alaska withholds nothing at state level, your pay stub has one fewer line than most Americans' and one fewer thing to get wrong. What pays for that is petroleum severance taxes, plus a local sales tax in about a hundred communities.
4. Alaska once had an income tax, and repealed it
This is the part of the history most no-tax states cannot claim. Alaska did levy a personal income tax after statehood, and repealed it in 1980 when Prudhoe Bay oil revenue arrived at a scale that made the income tax look unnecessary.
That matters for how you read the state's fiscal position. Alaska did not build a tax structure without an income tax; it removed one and replaced the revenue with petroleum. When oil prices fall, the state's budget falls with them, and reinstating an income tax has been debated in Juneau repeatedly since.
Nothing has been enacted. As of tax year 2026 there is no Alaska individual income tax. But unlike Nevada, where a constitutional provision bars the levy, or Wyoming, where a statute preempts the field, Alaska's zero rests on ordinary legislation and could in principle be changed by ordinary legislation.
That is a difference worth knowing, not a prediction.
5. The local sales tax, which is the real Alaska complication
Alaska has no statewide sales tax. It also has roughly a hundred municipalities and boroughs that levy one, commonly in the 2% to 7.5% range.
There is no Alaska equivalent of a state rate with local add-ons. Each community sets its own rate independently, and many set none at all.
The practical result is that two Alaskans with identical salaries can face very different consumption tax burdens depending entirely on where they live:
- Anchorage — the state's largest city, home to roughly 40% of the population — levies no general sales tax. An Anchorage resident genuinely pays neither income nor sales tax.
- Juneau, the capital, levies a general sales tax.
- Many smaller boroughs and cities levy their own, at rates set locally, sometimes with seasonal variation or caps on the taxable amount of a single sale.
So a "cost of living in Alaska" comparison that treats the state as sales-tax-free is wrong for most of the state's geography and right for most of its population. Both facts are true; which applies depends on the town.
Check the specific municipality's rate before budgeting. It is not a statewide number and there is no default to fall back on.
No local income tax anywhere
Separately, and importantly: no Alaska borough or municipality levies a personal income tax. The local variation is entirely in sales tax and property tax. A take-home figure needs no local asterisk in Alaska, even though a grocery bill does.
6. What the zero is worth
| Compared with | Their tax on $85,000 | Alaska keeps you |
|---|---|---|
| Oregon | $6,864 | +$6,864 |
| Hawaii | $4,656 | +$4,656 |
| Minnesota | $4,257 | +$4,257 |
| California | $3,660 | +$3,660 |
| Idaho | $3,519 | +$3,519 |
| Montana | $3,442 | +$3,442 |
| Colorado | $3,032 | +$3,032 |
| Washington | $0 | $0 |
Washington is the comparison that matters most in practice, because so much Alaska-bound migration and so many Alaska careers route through Seattle. And it is a wash: Washington has no income tax either.
The states that do tax income and do send people north are Oregon, California and Minnesota, and against those the saving is $3,660 to $6,864 a year at $85,000.
Scaling against Oregon and California:
| Salary | vs. Oregon | vs. California |
|---|---|---|
| $45,000 | $3,364 | $783 |
| $85,000 | $6,864 | $3,660 |
| $175,000 | $15,280 | $12,030 |
7. The Permanent Fund Dividend is not a tax break
The PFD is the single most misunderstood item in Alaska's finances, and it gets folded into take-home comparisons in ways that are simply wrong.
It is a payment to you, not a reduction in what you owe. The Alaska Permanent Fund is a sovereign wealth fund built from petroleum royalties, and eligible residents receive an annual dividend from its earnings. The amount varies year to year with the fund's performance and with legislative appropriation — it is not a fixed entitlement and has been the subject of sustained political fights over its size.
Three consequences people get wrong:
It is federally taxable income. The PFD is reportable on your federal return. A dividend does not arrive tax-free; it arrives having increased your federal taxable income for the year. If it pushes you into a higher federal bracket at the margin, the extra federal tax comes out of it.
It is not guaranteed and not fixed. Budgeting a specific PFD amount years ahead is guessing. The amount has ranged widely.
Eligibility requires actual residency for a qualifying period, with rules about absences from the state. Moving to Alaska in December does not produce a dividend the following year.
How to think about it honestly: the PFD is a real cash benefit of Alaska residency, worth counting. It is not part of the take-home calculation, it is federally taxed, and it should not be netted against a state income tax you were never going to pay anyway.
8. What Alaska charges instead: oil, mostly
Alaska's revenue structure is unlike any other state's.
Petroleum production taxes and royalties — severance taxes on oil and gas extraction, plus the state's royalty share as landowner — have historically been the backbone. This is why the income tax was repealed in 1980 and why the Permanent Fund exists at all.
The consequence is volatility. A state funded by resource extraction has revenue that tracks a commodity price it does not control. Alaska has run large surpluses and large deficits within a few years of each other for this reason, and the recurring policy debates — the size of the PFD, whether to reinstate an income tax, whether to institute a statewide sales tax — are all downstream of it.
Property tax exists but is unevenly applied. Municipalities and organized boroughs levy property tax. Much of Alaska is in the unorganized borough, where there is no borough government and no borough property tax. Anchorage, Fairbanks and Juneau all levy property tax; large stretches of the state do not.
There is no statewide property tax on ordinary residential property, though the state does levy an oil and gas property tax on production infrastructure.
9. The federal share
| Amount | Share of gross | |
|---|---|---|
| Federal income tax | $9,870 | 11.61% |
| FICA | $6,503 | 7.65% |
| Alaska income tax | $0 | 0% |
| Total | $16,373 | 19.26% |
FICA still starts at the first dollar
Someone earning $12,000 in Alaska owes no federal income tax and still pays $918 in Social Security and Medicare. In a community with no local sales tax, that $918 may be very close to the whole of what they pay in tax — which is a genuinely unusual position and one of the few places the "you pay nothing" claim comes close to true.
10. Cost of living is the offset, and it is large
The income tax saving is real. So is the cost of everything else.
Alaska's cost of living runs well above the national average, and the gap widens sharply with remoteness. The drivers are structural rather than temporary:
Shipping. Almost everything consumed in Alaska arrives by barge, ship or plane. That freight cost is embedded in the price of groceries, building materials, vehicles and fuel.
Energy. Heating costs in an Alaskan winter are not comparable to those in the Lower 48, and in communities off the road system and off the grid, electricity can cost several times the national average per kilowatt-hour.
Rural amplification. In road-accessible Southcentral Alaska the premium is meaningful. In village Alaska it can be extreme — grocery prices multiples of Anchorage's, and Anchorage is already above the national average.
Healthcare. Alaska's medical costs are among the highest in the country, driven by a small population, limited provider competition, and the cost of moving patients and staff.
The honest arithmetic: a $6,864 income tax saving against Oregon at $85,000 is roughly $572 a month. That is real money, and in much of Alaska it is smaller than the cost-of-living differential it is being asked to cover. Alaska is a strong choice for many reasons; a low overall cost of living is not usually one of them.
Employers know this, which is why Alaska wages in many occupations run above national levels. Compare the offer, not the tax rate.
11. Retirees
Alaska taxes no retirement income of any kind — Social Security, pensions, 401(k) and IRA distributions are all untaxed, because Alaska taxes no personal income. There is no estate or inheritance tax.
Property tax exemptions for seniors are meaningful where they apply: Alaska provides for a senior citizen and disabled veteran property tax exemption on a portion of assessed value, administered through the municipality.
But cost of living and healthcare access dominate the retirement calculation here in a way that the tax position does not offset. Medical care in rural Alaska frequently means travel, and travel in Alaska frequently means flying. That is a cost and a logistical reality that grows with age.
Retirees who stay in Alaska generally stay for reasons other than tax. Those who leave frequently cite winter and healthcare rather than the tax structure they were already enjoying.
12. Working remotely from Alaska
Increasingly common, and the rules are the usual ones.
Living in Alaska and working remotely for an out-of-state employer generally means no state income tax, because income is sourced where the work is performed.
Check for convenience-of-the-employer rules in the employer's state. New York's is the best known, and it can result in New York taxing income earned entirely from an Alaskan desk unless the arrangement meets its necessity test.
PFD eligibility has residency requirements including limits on time spent outside the state. A remote worker who spends months at a time in the Lower 48 should check the eligibility rules rather than assume, because the allowable absence categories are specific.
Time zones are a practical cost, not a tax one, but they are worth naming: Alaska is four hours behind the East Coast, which shapes what remote roles work well.
13. What you can still control
Every lever is federal.
Pre-tax deferrals save your federal rate only. A $10,000 traditional 401(k) contribution saves an $85,000 earner $2,200 federally. In Oregon the same deferral would save $875 more in state tax. Tax-deferred saving is worth less in Alaska — still worth doing, and the benefit is smaller.
HSA contributions through payroll cut FICA as well as federal income tax. That 7.65% saving is state-independent, so it is a larger share of the total benefit here than in a taxing state.
Roth versus traditional loses its state-tax argument entirely: no rate to deduct against now, none to pay later.
And a PFD-specific point: because the dividend increases federal taxable income, a year with a large PFD is a year where an additional pre-tax deferral does slightly more federal work than usual. Small, but real.
Frequently asked questions
Does Alaska have a state income tax? No. The Alaska Department of Revenue's Tax Division states that the state does not have an individual income tax and that no employee withholding for state income tax is required. Alaska repealed its income tax in 1980.
What is take-home pay on $85,000 in Alaska? $68,628 for a single filer taking the standard deduction, after $9,870 federal income tax and $6,503 FICA.
Does Alaska have a sales tax? Not statewide — but roughly a hundred municipalities and boroughs levy their own, commonly between 2% and 7.5%. Anchorage levies none; Juneau does. Whether you pay sales tax in Alaska depends entirely on which community you live in.
Can an Alaska borough tax my income? No. No Alaska borough or municipality levies a personal income tax. Local taxing authority runs to sales tax and property tax only.
Is the Permanent Fund Dividend tax-free? No. The PFD is reportable federal taxable income. It is a payment from a sovereign wealth fund, not a tax reduction, and its amount varies year to year with fund performance and legislative appropriation.
How much does Alaska save me against Oregon? $6,864 a year at $85,000 and $15,280 at $175,000. Against California it is $3,660 and $12,030. Against Washington it is nothing — Washington has no income tax either.
Does Alaska tax retirement income? No — Social Security, pensions and 401(k) or IRA distributions are all untaxed, and there is no estate or inheritance tax. Senior property tax exemptions are administered by the municipality.
Does the tax saving cover Alaska's cost of living? Usually not. Alaska's costs run well above the national average and the gap widens sharply with remoteness, driven by freight, energy and healthcare. Compare the salary offer rather than the tax rate.
What to do next
Alaska's paycheck answer is a clean zero. The sales tax answer is municipal, and the cost-of-living answer is the one that decides most moves.
- Alaska take-home pay calculator — your salary with every federal deduction shown separately.
- Your Paycheck in the USA in 2026 — all fifty states on one salary.
- Take-Home Pay in Washington — the other no-income-tax state on the Pacific route.
- Alaska rent affordability — what the take-home actually supports.
- 50/30/20 budget calculator — built on take-home rather than salary.
Every figure on this site is sourced and dated. How we source every number.
Figures in this article are illustrations computed by this site's own tax engine for tax year 2026, on a single filer taking the federal standard deduction with no dependents or pre-tax deferrals unless stated. Federal figures come from IRS Revenue Procedure 2025-32 and the Social Security Administration; Alaska's position from this site's sourced 50-state dataset, citing the Alaska Department of Revenue Tax Division. Local sales tax rates, property tax and cost of living are discussed qualitatively and vary enormously by community. This is general education and not tax advice; consult a licensed tax professional for your own situation.