I wanted to write a post highlighting the financial benefits of living in Alaska. With oil prices low, the state of Alaska isn’t in a great financial position. The state’s operating budget has counted on major income from oil and that income is now severely lacking. Because of that, many of these things may change this next year. But as things stand now, despite our high cost of living, there are several major perks for living in the state.
- The Permanent Fund Dividend – Or the PFD as it’s called up here is the dividend paid out to shareholders of the “Permanent Fund” – which, in Alaska, means every man, woman, and child that has lived in the state for at least one calendar year. I wrote a longer post: What is the PFD? explaining more about it if you’re interested in the details (in fact, it was our very first post here on Northern Expenditure). The PFD is announced in September and paid in October (leading to a shopping frenzy that beats out Black Friday!). The 2015 PFD was the largest one in its history at $2072 per person (a total of $10,360 if you’re doing the math for our family). The current talk is to restructure this so it’s based more on state income than on market returns and cap it at $1000/person. Also, remember that the PFD is taxable, so keep that in mind when you estimate your tax refund for the year.
- No Income Tax – The PFD is actually often referred to as a “reverse income tax” because we pay no income tax at the state level in Alaska. This also may change with the Governor’s current proposal including a new 1.5% income tax.
- No Sales Tax – This is regional, but currently, Alaska has no state sales tax and Anchorage has no city sales tax. I love this because I was raised in Oregon, which also has no sales tax, and I really like being able to calculate something that is $5 actually being $5!
- Subsistence Fishing – We eat delicious salmon weekly here in the Banks household. Once a year, we catch our yearly amount of fish doing what’s called dipnetting. Only Alaskan state residents are legally allowed to dipnet. Each household is allowed to catch 25 for head of household with 10 additional fish for each household member (our limit is 65 for our house). I recommend reading about last year’s fishing adventure to see pictures and find out more. But ultimately, we pay less than $4/lb for our salmon which really helps keeps our grocery costs down.
- The Alaska State Energy Rebate Program – This program has been de-funded and now they are limiting the wait list for the remaining funds, but this program reimburses homeowners certain amounts for making energy-efficient improvements. We finished the program at the end of 2015 and are awaiting our final reimbursement of nearly $7800. Thanks to this program, we paid a total of $1070.66 out of pocket to insulate our attic, replace our garage door, front door, windows, insulate our crawlspace, replace our hot water heater, and add new bathroom fans.
Our timing on all of these things has been wonderful. We’ve enjoyed the financial benefits of living in Alaska and even if things change in the near future, we’ve certainly gotten a boost from enjoying these perks while they lasted!
What are the financial benefits of living where you do?