Alaska is one of the few states without an income tax, making it appealing for residents searching for tax savings. Other states like Florida, Texas, and Nevada also share this benefit. If you’re an Alaskan, you might still be subject to federal income tax for the 2024 tax year (the taxes you’ll file in 2025)—which applies to most earnings.
Alaska residents may also run into other types of taxes, such as sales taxes levied by local jurisdictions and property taxes, which vary across municipalities. Understanding your tax responsibilities is important for managing your finances while enjoying the freedom of no state income tax in Alaska.
*Note you are still responsible for federal taxes if you make the IRS income filing threshold. This article addresses state-specific taxes only.
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Specific income tax considerations in AlaskaTalk to a tax expert for freeOther types of common taxes in AlaskaHow to file income tax in AlaskaSpecific income tax considerations in Alaska
Alaska is a tax-friendly state, as it doesn’t have an individual income tax. This means that income sources like retirement and pension funds, investment earnings, Social Security benefits, and military pay are not taxed at the state level, giving you a financial advantage if you call Alaska home. With no state income tax, you can potentially retain more of your earnings.
A unique additional type of income which Alaska residents may qualify to receive is the annual Permanent Fund Dividend (PFD). The PFD is taxable on your Federal return. We can help you file the PFD in TurboTax.
It’s important to remember that your income may still be subject to federal taxes. Staying on top of your federal tax requirements keeps you compliant while maximizing potential financial benefits. Also, if you earn income in another state with an income tax, you may need to file a return in that state to report those earnings.
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Other types of common taxes in Alaska
While Alaska does not levy state income tax, residents should be aware of these other common taxes:
- Property tax: Property taxes in Alaska are assessed and administered at the local level. Rates vary by municipality, and some areas offer exemptions for seniors or disabled veterans. Property tax revenue supports local services like schools and infrastructure.
- Sales tax: Alaska does not have a statewide sales tax, but local jurisdictions can impose sales taxes. Rates and applicable goods or services vary by location. Always check local rules to understand your sales tax obligations.
How to file income tax in Alaska
While Alaska doesn’t impose a state income tax, most residents still need to file federal income taxes. It’s also important to consider property and sales taxes, which can impact your financial planning.
TurboTax makes filing your federal taxes straightforward while helping you navigate Alaska-specific tax rules. We’ve got you covered, no matter if you want to file DIY or get help from a tax expert. Need more help with your taxes? Connect with a local TurboTax expert for personalized help or let us file for you – from start to finish.