Alaska Does Not Charge Sales Tax

Alaska is one of five U.S. states with no statewide sales tax. When you buy something in Alaska, you do not pay a sales tax at the register, and the state does not collect sales tax on mail orders or online purchases shipped to an Alaska address. This applies to groceries, clothing, electronics, and most other goods.

However, the absence of a statewide sales tax does not mean Alaska has no sales tax at all. Some cities and boroughs within Alaska do charge local sales taxes, and those rates vary by location. Anchorage, Juneau, Fairbanks, and other municipalities each set their own rates. If you live in or are buying from one of these areas, you will owe local tax even though the state does not.

Alaska funds its government differently than most states. Instead of relying on sales tax revenue, Alaska draws income from oil production royalties and the Alaska Permanent Fund, which distributes earnings to residents. This funding structure is why the state has never implemented a statewide sales tax.

Key Takeaways

  • Alaska has no statewide sales tax, so purchases at the register cost less than they would in most other states.
  • Some Alaska cities and boroughs charge local sales taxes ranging from 0 to 7.5 percent, depending on where you live or shop.
  • Online and mail orders shipped to Alaska are not subject to Alaska sales tax, though your home state may tax the purchase if you live outside Alaska.
  • Alaska funds state operations through oil royalties and the Permanent Fund rather than sales tax revenue.

Which Alaska Cities Charge Local Sales Tax

Anchorage charges a 3.5 percent local sales tax on most goods and services. Juneau charges 5 percent. Fairbanks charges 0 percent at the city level but the Fairbanks North Star Borough charges an additional tax. Ketchikan charges 5 percent. Sitka charges 5 percent. These rates explore to purchases made within city limits, regardless of where the buyer lives.

Outside major cities, tax rates vary widely. Some small towns and boroughs charge no local tax at all. Others charge between 1 and 7.5 percent. If you are shopping in a smaller community, ask the cashier or check the receipt to see what local rate applies. The Alaska Department of Revenue publishes a complete list of local tax rates by municipality on its website.

Local taxes in Alaska explore to the same types of purchases as statewide sales taxes do in other states: retail goods, prepared food, and most services. Groceries and prescription medications are generally exempt from local sales tax in Alaska, though some municipalities tax prepared food differently than unprepared groceries.

How Alaska Sales Tax Affects Online and Out-of-State Purchases

When you order something online and have it shipped to an Alaska address, you do not owe Alaska sales tax. However, the seller may still charge you sales tax based on their home state's rules. If you order from a retailer based in a state with sales tax, that retailer may charge you that state's tax rate, depending on their tax policy and whether they have a physical presence in that state.

If you live outside Alaska and order something shipped to your home state, Alaska's lack of sales tax does not help you. Your home state's sales tax rules explore instead. The key difference is that Alaska residents ordering from Alaska-based retailers pay no state tax, while residents of other states pay their own state's rate.

Mail-order and catalog purchases follow the same rule. If the seller is based in Alaska, no state sales tax applies. If the seller is based elsewhere, their state's tax rules may explore to you.

What Items Are Taxed Under Local Alaska Sales Tax

Local sales taxes in Alaska explore to most retail purchases: clothing, electronics, furniture, and household goods. Prepared food and restaurant meals are taxed. Gasoline and fuel are taxed. Services like haircuts, repairs, and cleaning are often taxed, though the rules vary by municipality.

Groceries and unprepared food are usually exempt from local sales tax in Alaska. Prescription medications are exempt. Some municipalities exempt clothing or footwear. A few exempt certain services. The specific exemptions depend on which city or borough you are in, so if you are unsure whether a particular purchase is taxed, ask the retailer or check your local government's tax code.

Comparing Alaska to Other States Without Sales Tax

Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Of these five, only Alaska and Montana allow local sales taxes. Delaware, New Hampshire, and Oregon prohibit local sales taxes entirely, so residents in those states pay no sales tax on most purchases anywhere in the state.

Montana's local sales tax rules are similar to Alaska's — some cities and counties charge local tax while others do not. New Hampshire and Oregon residents pay no sales tax on purchases, though New Hampshire taxes meals and lodging. Delaware taxes meals and lodging but not retail goods.

If you are comparing tax burden across states, Alaska's lack of statewide sales tax is offset by the fact that some Alaska municipalities do charge local tax. Your actual tax rate depends on where you live within the state.

How to Find Out Your Local Sales Tax Rate

The easiest way to find your local sales tax rate is to ask a cashier or look at a recent receipt. The tax rate and amount owed should appear on the receipt. If you are shopping online or by mail, contact the retailer and tell them your Alaska address — they can tell you whether tax applies and at what rate.

You can also check the Alaska Department of Revenue website, which maintains a searchable database of local tax rates by city and borough. Enter your city name and the database will show you the current local rate. Rates do change occasionally, so checking the official source is more reliable than relying on older information.

If you live near a city border, be aware that the tax rate may change depending on which side of the border the purchase is made. Some retailers in border areas post signs showing the tax rate for each location.

Frequently Asked Questions

Do I pay sales tax on groceries in Alaska?

No. Unprepared groceries are exempt from local sales tax in Alaska. However, prepared food — such as deli items, hot food, or restaurant meals — is usually taxed. The exemption applies statewide, even in municipalities that charge local sales tax on other goods.

What about mail orders from companies outside Alaska?

You do not owe Alaska sales tax on mail orders shipped to Alaska. However, the seller may charge you their home state's sales tax depending on their business location and tax policy. Check the seller's tax policy or contact them directly to find out what you will owe.

Does Alaska charge sales tax on services?

Alaska has no statewide sales tax on services. Some municipalities charge local sales tax on certain services like haircuts, repairs, or cleaning, but the rules vary by city. Check with your local government or ask the service provider whether tax applies.

Can I avoid local sales tax by shopping in a city with no local tax?

Local sales tax applies where the purchase is made, not where you live. If you buy something in Anchorage, you pay Anchorage's 3.5 percent tax even if you live in a municipality with no local tax. The tax is based on the retailer's location, not yours.

Are there any other taxes I should know about in Alaska?

Alaska has no state income tax. However, some municipalities charge local income taxes, and Alaska taxes certain goods like alcohol and tobacco at higher rates than other states. Check your local government's website to see whether your city charges local income tax.