Alaska Paycheck Calculator

Frequently Asked Questions

What is the income tax rate in Alaska?

The state income tax rate in Alaska is 0% while federal income tax rates range from 10% to 37% depending on your income. This paycheck calculator can help estimate your take home pay and your average income tax rate.

How many income tax brackets are there in Alaska?

Alaska does not have a state income tax so there are no tax brackets. However, there are still tax brackets for federal income tax. For more details, check out our detail section.

How Your Alaska Paycheck Works

Alaska is a land of wonder and adventure, where nature’s beauty and bounty are among the best in the world. From the majestic mountains and glaciers to the vast forests and wildlife, Alaska offers many opportunities for exploration and enjoyment. Whether you’re fishing for salmon, hiking the trails, or watching the northern lights, you’ll always find something to do and see in the Last Frontier.

The state is not only a paradise for outdoor enthusiasts, but it’s also a haven for taxpayers, who enjoy some of the lowest tax burdens in the nation. Let's go over what this means for your paycheck.

The largest item taken from your gross income is typically federal income tax. This is a progressive tax that varies mostly depending on your filing status. The tax brackets used will vary every year to account for inflation and changes in the tax law. We cover this in more detail with an entire section dedicated to federal taxes below.

Your employer will have you fill out a Form W-4 when you start a job. This document will help them calculate how much federal income tax to withhold from your paychecks.

Another withholding you'll see is the FICA tax, which stands for Federal Insurance Contributions Act. This tax helps fund two important social programs: Social Security and Medicare. Social Security provides retirement benefits, disability benefits, and survivor benefits to millions of Americans. Medicare provides health insurance to people who are 65 or older, disabled, etc.

You pay 6.2% of your gross income for Social Security tax and 1.45% for Medicare tax. There is a limit on how much of your income is subject to Social Security tax ($147,000 in 2022), but there is no limit for Medicare tax. Your employer matches your FICA contributions, so the total FICA tax rate is 15.3%. Additionally, if you earn more than a upper threshold, you have to pay an extra 0.9% for Medicare surtax. FICA tax payments help invest in both your future and the future of others.

You may also have some voluntary contributions from your gross income that lower your taxable income and tax liability. These are called pre-tax contributions, and they include things like health insurance premiums, retirement plan contributions, flexible spending accounts (FSAs), and health savings accounts (HSAs). The amount and type of pre-tax contributions you can have depend on your employer's benefit plan and your eligibility.

On the other hand, you may have some items taken from your net income that do not affect your taxable income or tax liability. These are called post-tax items, and they include things like charitable donations and union dues.

One of the benefits of living and working in Alaska is that you don't have to pay state income tax on your earnings. That means you get to keep more of your paycheck than most other states. Instead, the state mainly funds its operations using money earned from petroleum, which accounts for most of its revenue.

At least on the state level, you'll also see no sales tax. Some sources will go as far to say that there's no sales tax at all, but this isn't accurate. Local government has the ability to impose their own sales tax so depending on where you shop, you might see a little bit of tax on your purchases.

Something unique in Alaska that's worth mentioning is the Permanent Fund Dividend (PFD). Although this doesn't affect your paycheck, it can help with your wallet since it pays eligible residents a share of the state’s oil revenue every year. The amount of the PFD varies each year depending on the performance of the Alaska Permanent Fund, which is a sovereign wealth fund that invests the state’s oil royalties and other sources of revenue.

To qualify for the PFD, you must meet certain eligibility requirements, such as being a resident of Alaska for the entire calendar year. The official government website includes details for the full list of criteria here. If you think you're eligible, you can apply for this dividend online at pfd.alaska.gov or with a paper application.

Lastly, although there's no state income tax in Alaska, there is a state unemployment tax that does exist and this is applied on your income up to a certain limit.

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For sales tax, please visit our Alaska Sales Tax Rates and Calculator page.