Alaska Tax UpdatesTax Professionals' Resource
January 24, 2013 — 1,662 views
The largest state in the United States is Alaska, but there is no state levied sales tax and no use tax. 392 communities exist in Alaska, and many of these are still unincorporated. There are 162 local governments which are incorporated municipalities, and 18 of these are set up as boroughs. Boroughs are roughly similar to counties. The rest of the incorporated areas are cities. The state constitution of Alaska does give municipal governments broad powers to enact sales and use taxes, but this type of tax cannot be authorized unless a referendum is held and passed by the citizens of a particular municipality.
Local Sales Taxes
Only 62 municipalities actually levy sales taxes and these range from one to seven percent. Typically, these local rates are between two and five percent. Anchorage and Fairbanks have no sales taxes, but the state capital, Juneau, has a sales tax rate of five percent.
Other Alaska Taxes
Some other taxes unique to Alaska are raw fish taxes, severance taxes, pull tab gaming taxes and fuel transfer taxes.
Alaska Property Tax Facts
14 out of the 18 boroughs levy property taxes, and only 11 cities located outside of a borough collect these taxes. Therefore, only 25 percent of municipalities levy actual property taxes.
Kenai Peninsula Sales Tax
Kenai Peninsula levies a three percent sales tax on all retail sales, all rents, most services and all wholesale sales. The proceeds of these taxes go directly to the school district. Businesses can apply for specific exempt and resale certificates and these forms can be found online. Rules can be arcane, and there is a specific exemption for non-prepared food items.
Wasilla Sales Tax
It is illegal to do business in Wasilla without a sales takes license. Wasilla's sales tax is broadly levied on all retail sales, rentals and services. All consumers are charged sales tax unless they have obtained an exemption from the city. The current rate is two per cent. Only the first $500 of any transaction is taxed at two percent, however, and the remainder is subject only to a $10 maximum fee.
Alaska is one of the few states that does not levy a state-wide tax. The others are Oregon, Delaware, New Hampshire and Montana. Unlike these other states, local municipalities in Alaska are free to levy their own sales taxes. With such a wide range of sales tax variations, accountants in Alaska need to carefully research local tax rates.