Research Areas

Alaska

The Facts on Alaska’s Tax Climate

Here are some basic facts on Alaska’s tax system and how it compares to other states:

Tax Freedom Day Arrives on March 26 in Alaska, Earliest in Nation
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2010, Alaska taxpayers work until March 26 (50th nationally) to pay their total tax bill, 2 full weeks before national Tax Freedom Day (April 9). The Tax Freedom Days of neighboring states were: Hawaii, April 9 (ranked 19th nationally); Oregon, April 8 (ranked 20th highest nationally); Washington, April 15 (ranked 5th highest nationally); and California, April 14 (ranked 7th highest nationally).
Full study of Tax Freedom Day, nationwide and in each state

Alaska's State/Local Tax Burden Lowest in the Nation
Since 1990, Alaska's state and local tax burden has consistently been the nation's lowest. Estimated now at 6.4% of income, Alaska's state/local tax burden is well below the national average of 9.7%. Alaskans pay $2,871 per capita in state and local taxes.

Before the Trans-Alaska pipeline was finished in1977, taxpayers in Alaska bore the second-highest tax burden in the country. By 1980, with oil tax revenue a certified bonanza, Alaska repealed its personal income tax and started sending out checks instead. The tax burden plummeted, and now Alaskans are the least taxed.
Alaska's State-Local Tax Burden, 1977-present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008

Alaska’s 2010 Business Tax Climate Ranks 3rd
Alaska ranks 3rd in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of the nearest states were as follows: Hawaii (24th), Oregon (14th), Washington (9th) and California (48th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)

Alaska's Individual Income Tax System
Alaska levies no individual income taxes, joining six other states with the same policy: Wyoming, Washington, Nevada, Florida, Texas and South Dakota.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Alaska's Corporate Income Tax System
Alaska's corporate tax structure consists of ten separate brackets with a top rate of 9.4% kicking in at an income level of $90,000--the 4th highest rate in the nation. In FY2008, Alaska's state-level corporate tax collections (excluding local taxes) reached $1,433 per capita, which ranked highest in the nation.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita

Alaska Sales and Excise Taxes
Alaska levies no general sales or use tax on consumers, joining Delaware, New Hampshire, Montana and Oregon as the only other states with no sales tax.  At the local level, Alaska collected $717 per person in general and selective sales taxes in 2007.  Alaska's gasoline tax stands at 8.0 cents per gallon (lowest nationally). Alaska's cigarette tax stands at $2.00 per pack of twenty (10th highest nationally). The gasoline tax was adopted in 1946 and the cigarette tax in 1949.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.

50-State Table of State and Local General and Selective Sales Tax Collections Per Capita

Alaska Property Taxes Comparatively High
Alaska is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Alaska's localities collected $1,358.24 per capita in property taxes in fiscal year 2006, the latest year for which the Census Bureau has published state-by-state data. At the state level, Alaska collected $80.94 per capita during FY 2006, making its combined state/local property taxes $1,439.18 per capita, ranked 12th highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Alaska is a Beneficiary State
Alaska taxpayers receive more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, Alaska citizens received approximately $1.84 in the way of federal spending. This ranks the state 3rd highest nationally and represents a large rise from 1995 when Alaska received $1.21 per dollar of taxes in federal spending (then ranked at 17th highest nationally). The nearest states and the amount of federal spending they received per dollar of federal taxes paid were: Hawaii ($1.44), Oregon ($0.93), Washington ($0.88) and California ($0.78).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state