Why You Should Live in Alaska: Low Taxes and Free Money

Filed in archive Housing , Real Estate , Taxes on April 17, 2007

Alaska has no state sales tax and no state income tax. But that's only the beginning...

I came across this article today that shows Anchorage to be the cheapest major American city to live in, at least as far as taxes are concerned. They've got no state income tax, no state sales tax, and their real estate values are modest, so property taxes are low:

Adding it all up, the Anchorage family paid $3,048 -- or 4.1 percent of annual income -- in state and local taxes, the study reported.

That was less than half the national-average tax rate of 8.8 percent for the same income, and only one-fifth the rate paid by residents in Bridgeport, Conn. -- which topped the nation with a tax rate of 20.5 percent, mostly due to a combination of high home values and hefty property taxes.

That's good, right? But check this out: Alaska actually pays its citizens to live there. Yes, you read correct.

Because Alaska has all kinds of money due its huge oil reserves, it actually has all kinds of cash to give back to its residents. So much cash, in fact, that some residents get more money from the state than they pay in taxes.

It's called the Permanent Fund Dividend. (Check out the picture of the Alaskan Pipeline at their site. I'm always amazed that the pipeline is just simply a bunch of pipes strung together across the state.) Last year's dividend: $1106.96. This is per person, not per household, so you can really rack up the cash in Alaska if you have a family.

I'm going!