Alaska is the only US state with no income tax AND no state sales tax. Oil revenues fund the government — and pay residents an annual Permanent Fund Dividend check.
Alaska is uniquely positioned: no state income tax, no state sales tax (though some municipalities like Juneau levy local sales taxes). The Alaska Permanent Fund — funded by oil royalties — has grown to over $70 billion and pays an annual dividend to every qualifying Alaska resident. Recent PFD payments: $1,312 (2022), $1,312 (2023), $1,702 (2024). The dividend is subject to federal income tax but not Alaska state tax.
In 1977, the Trans-Alaska Pipeline began delivering oil from Prudhoe Bay on Alaska's North Slope to the port of Valdez. The resulting oil revenues transformed Alaska's state finances almost overnight. By 1980, Alaska abolished its state income tax entirely — it simply didn't need the revenue anymore. Governor Jay Hammond established the Alaska Permanent Fund in 1976 to save a portion of oil revenues for future generations. Since 1982, the Fund has paid an annual dividend to every Alaskan who has been a resident for at least one full calendar year.
The PFD is the most visible manifestation of Alaska's oil wealth sharing. Every eligible resident — man, woman, and child — receives the same annual check. For a family of four, the 2024 PFD of $1,702 per person meant $6,808 deposited directly into family accounts in October. The PFD creates interesting economic dynamics: Alaska has one of the lowest rates of income inequality among US states, in part because every resident receives the same flat amount regardless of income. However, the PFD amount fluctuates with oil prices and Fund performance — it can drop sharply in low-oil-price years.
Alaska's high cost of living partially offsets the tax advantage. Anchorage (largest city), Juneau (capital), Fairbanks (interior hub), and Sitka are Alaska's main population centers — all more expensive than the US average for most goods, due to transportation costs. Groceries, fuel, and utilities cost significantly more than in the continental US, particularly in rural areas. Workers considering a move to Alaska for tax advantages should weigh these higher costs against the income tax and sales tax savings.
Alaska's economy centers on oil and gas, commercial fishing, tourism, federal government (military bases and land management), and healthcare. Oil price volatility has led to periodic state budget crises — the state has debated reinstating an income tax multiple times since 2015 when oil prices fell sharply. As of 2026, no income tax exists, but the political conversation about fiscal sustainability continues. Workers should note that Alaska's no-income-tax status, while long-standing, is not constitutionally protected the way some states' tax structures are.
No Alaska state income tax. Only federal income tax, SS (6.2%), and Medicare (1.45%) are deducted. The PFD is separate and paid annually. Estimates only.
| Gross Pay (this check) | $0.00 |
| Federal Income Tax | −$0.00 |
| Alaska State Tax | $0.00 ✓ |
| Social Security (6.2%) | −$0.00 |
| Medicare (1.45%) | −$0.00 |
| Net Take-Home Pay | $0.00 |
No. Alaska abolished its state income tax in 1980 after Trans-Alaska Pipeline oil revenues made it unnecessary. Alaska is one of nine US states with no state income tax, and it's unique in also having no state sales tax — making it the only state in the US with neither a state income tax nor a state sales tax. Some Alaskan municipalities (Juneau, Ketchikan) do levy local sales taxes, but there is no statewide sales tax.
The Alaska Permanent Fund Dividend (PFD) is an annual payment made to every Alaska resident who has lived in the state for the full preceding calendar year and meets other eligibility requirements. Recent annual amounts: $992 (2021), $1,312 (2022), $1,312 (2023), $1,702 (2024). The dividend is paid in October each year. A family of four received $6,808 in October 2024. The PFD is taxable at the federal level as ordinary income but has no Alaska state tax since Alaska has no income tax.
Yes, significantly in many areas. Groceries, utilities, fuel, and housing in Anchorage cost 25–40% more than the US average. In rural Alaska (villages accessible only by air), costs are dramatically higher — groceries can cost 3–4x the national average. Anchorage and Juneau are expensive but comparable to mid-tier West Coast cities. The combination of no income tax, no state sales tax, and the PFD partly offsets the higher cost of living, but workers should research specific cost of living in their target Alaska community before assuming the tax advantages translate directly to more disposable income.
Politically, yes. Alaska has debated reinstating an income tax multiple times since oil prices collapsed in 2015–2016. A declining oil production base and volatile oil prices have stressed the state budget repeatedly. As of 2026, no income tax exists and there is no immediate legislation to reinstate one. However, unlike some states whose constitutions ban income taxes, Alaska's no-income-tax status is a legislative choice that could theoretically be reversed. Workers making long-term financial plans for Alaska residency should be aware of this distinction.
Yes. Alaska has no state income tax, but FICA taxes (Social Security and Medicare) are federal taxes that apply to all US workers regardless of state. Social Security is 6.2% on wages up to $184,500 (2026 wage base). Medicare is 1.45% on all wages, plus 0.9% additional Medicare on wages above $200,000 (single) or $250,000 (married filing jointly). These federal taxes are the only paycheck deductions for Alaska workers, along with federal income tax.