Alaska State Taxes: What You’ll Owe in the 2026 Tax Season

Alaska doesn’t have an income tax or statewide sales tax, which helps it rank fourth on the Tax Foundation’s 2026 State Tax Competitiveness Index. However, the state does allow local governments to impose their own sales taxes and has relatively high property tax rates.

The big picture:

• Income tax: The state has no income tax.
• Property tax: The average property tax rate in Alaska was 0.94 percent of a home’s assessed value in 2024, according to the Tax Foundation. However, actual rates vary among the 24 cities and boroughs (county equivalents) that impose a property tax.
• Sales tax: Alaska doesn’t have a statewide sales tax, but 107 municipalities levy a local sales tax, which ranges from 1 percent to 7 percent. The average local sales tax rate is 1.82 percent, according to the Tax Foundation.

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How is income taxed?

Alaska doesn’t have an income tax.

What about investment income?

Alaska doesn’t tax income, including investment income such as capital gains.

Are Social Security benefits taxed?

With no state income tax, Social Security is not taxed in the state.

How is property taxed?

The average property tax rate in Alaska was 0.94 percent of a home’s assessed value in 2024, according to the most recent data from the Tax Foundation. However, actual rates vary among the 24 municipalities and boroughs (county equivalents) that impose a property tax. The lowest is 0.01 percent in the Kusilvak Census Area, while the highest was 1.17 percent in Anchorage. Five jurisdictions were in the lowest bracket of $200 or less for the lowest median property taxes in the state: Aleutians East Borough, Bethel Census Area, Copper River Census Area, Kusilvak Census Area and the Northwest Arctic Borough. Meanwhile, Anchorage had the highest median property taxes paid, at $4,982.

What about sales and other taxes?

• Sales tax: Alaska doesn’t have a statewide sales tax, but 107 municipalities levy a local sales tax, and they range from 1 percent to 7 percent. The average local sales tax rate is 1.82 percent, according to the Tax Foundation. Exemptions vary by community, with some excluding adult day care services and assisted living services from sales tax, and all excluding prescription medication and prescribed medical devices. Specific exemptions for different municipalities can be found here.
• Gas and diesel: Gas and diesel are taxed at 8 cents per gallon.
• Vehicle tax: The state has no sales tax, but the Department of Motor Vehicles collects a motor vehicle registration tax on behalf of local jurisdictions that collect sales tax. The tax rates vary, and residents can calculate their rate here.
• Alcohol: Consumers may pay local sales tax for spirits, wine and beer, depending on the locality where it’s purchased. In addition, wholesalers and distributors pay taxes on alcohol, and those taxes can be passed on to the customer in the sale price.
• Lottery: Lottery winnings are not subject to a state income tax, but Lotto Alaska automatically withholds 24 percent of any winnings over $5,000 for federal taxes. However, larger jackpots may be subject to up to 37 percent in federal taxes, the highest federal tax rate.