How Much Is Income Tax in Alaska: Federal Rates, Payroll, and PFD

Alaska has no state income tax. The state repealed its personal income tax in 1980, and no borough or city imposes a local income tax either, so the only income tax that comes out of an Alaska paycheck is federal.¹ Federal rates run from 10% to 37% depending on how much you earn and how you file.² Payroll taxes still apply, and the Alaska Permanent Fund Dividend counts as federally taxable income.

No State or Local Income Tax

Alaska eliminated its personal income tax in September 1980, after Trans-Alaska Pipeline revenues gave the state a way to fund government without taxing wages. The zero-rate applies to every resident regardless of income level, employment type, or filing status. Boroughs and cities don’t add anything on top; there is no local income tax anywhere in the state.¹

Legislative proposals to bring back a state income tax surface from time to time, usually when oil prices sag and budget deficits widen. None have passed. Worth keeping in mind for long-range planning, but the current answer for wages, salaries, and self-employment income earned in Alaska is zero at the state level.

Federal Income Tax Brackets for 2026

The federal government taxes Alaska residents the same as everyone else. For tax year 2026, seven brackets step from 10% up to 37%.² The system is progressive: each slice of your income is taxed at the rate for its bracket, not your top bracket applied to everything.

A single filer with $60,000 in taxable income lands in the 22% bracket, which starts at $50,400 for single filers in 2026.³ Only the dollars above $50,400 are taxed at 22%. The first roughly $11,000 is taxed at 10%, then the next tier at 12%, and so on.

Standard Deduction

Before any rate applies, you subtract the standard deduction from your gross income. For 2026:

Single filers: $16,100
Married filing jointly: $32,200
Head of household: $24,150

Using the earlier example, a single filer earning $60,000 subtracts $16,100 off the top, bringing taxable income down to $43,900 and keeping every taxed dollar within the 12% bracket or below.³

Payroll Taxes Come Out of Every Paycheck

No state income tax doesn’t mean a clean pay stub. Federal payroll taxes still hit every Alaska employee:

Social Security: 6.2% of wages up to $184,500 in 2026⁴
Medicare: 1.45% of all wages, no cap
Additional Medicare Tax: an extra 0.9% on earnings above $200,000 for single filers or $250,000 for married couples filing jointly⁵

Your employer matches the 6.2% and 1.45%, but that match doesn’t show on your stub. For most workers earning under $200,000, the combined employee share is 7.65% of gross wages. On a $60,000 salary that’s roughly $4,590 a year, before any federal income tax withholding.

Self-Employment Tax

If you work for yourself, whether as a fishing crew member, a tourism operator, or a remote freelancer, you cover both halves of Social Security and Medicare. That’s 15.3% of net earnings: 12.4% for Social Security on net earnings up to $184,500 in 2026, plus 2.9% for Medicare on everything.⁶⁴

You can deduct the employer-equivalent half when calculating adjusted gross income, which softens the blow.⁶ If you expect to owe more than $1,000 in combined income and self-employment tax, the IRS requires quarterly estimated payments, and missing those deadlines triggers its own penalties.

Commercial fishing crew income is typically classified as self-employment income and reported on Schedule C, not as W-2 wages.

The Permanent Fund Dividend Is Federally Taxable

The Alaska Permanent Fund Dividend is a perk of residency, but the IRS treats the full amount as taxable income, including any supplemental energy relief payments bundled in.⁷ You report it on Schedule 1 (Form 1040), line 8g.⁸

The 2024 PFD was $1,702; the 2025 PFD was $1,000.⁹ For a family of four, even a modest year adds several thousand dollars in federally taxable income. That won’t usually push a household into a higher bracket on its own, but it does increase the total tax owed.

The PFD Division doesn’t withhold federal income tax from dividend payments by default. If your name or Social Security number doesn’t match IRS records, the IRS can impose 24% backup withholding automatically. Otherwise, plan to set aside a portion for tax time or adjust your W-4 withholding at your regular job to cover the extra income.

A Few Boundaries Worth Naming

The zero-rate covers personal income. It does not cover corporations. Traditional C-corporations operating in Alaska pay a graduated corporate income tax under Alaska Statute 43.20.011, starting at 0% on the first $25,000 and topping out at 9.4% on income above $222,000.¹⁰ S-corporations and LLCs structured as pass-through entities are exempt, and because Alaska doesn’t tax individual income, profits flowing through to owners escape state taxation entirely.

If you work seasonally in Alaska but live somewhere else, Alaska won’t tax your wages and has no nonresident filing or withholding requirements. Your home state, if it has an income tax, will likely tax those Alaska-earned wages, because most states require residents to report income no matter where they earned it. Self-employment tax at 15.3% applies to your net earnings regardless of which state you call home.⁶

1
Alaska Department of Commerce, Community, and Economic Development. Alaska Tax Facts
2
Internal Revenue Service. Federal Income Tax Rates and Brackets
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
4
Social Security Administration. Contribution and Benefit Base
5
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
6
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
7
Internal Revenue Service. Clarification About Alaska Permanent Fund Dividends
8
Internal Revenue Service. Frequently Asked Questions – 1099 MISC, Independent Contractors, and Self-Employed
9
Permanent Fund Dividend Division. Permanent Fund Dividend – Alaska Department of Revenue
10
Justia. Alaska Code 43.20.011 – Tax on Corporations