Financial Benefits of Alaska

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.

  1. 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.
  2. 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.
  3. 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!
  4. 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.
  5. 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?

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24 Comments

  1. Amanda Maniaci

    Great post! I am forever Alaska dreaming and this certainly adds to the allure. In Massachusetts I’d say we get ZERO financial benefits and we pay pay pay. Taxes, taxes, taxes. Fees, fees, fees. My four children are receiving an extremely high level rigorous public school education and the local history if very rich. Other than that not much to write home about! Expensive concrete jungle.

    • MaggieBanks

      The ability to road trip anywhere is a great one! We can’t do that!

  2. I won’t deny my love for shows on Alaska. Does the PFD count as taxable income on your federal return?

    • MaggieBanks

      It does, but we only claim ours and not our childrens’ – since those are theirs.

  3. Pretty attractive incentives! All the tax benefits are great, but the most exciting one to me is the salmon. Yum!

    • MaggieBanks

      Amen! If we moved, the salmon and the dipnetting (it’s super fun!) would be the biggest thing I would miss!

  4. Very unique financial benefits! Every area has financial pros and cons – the really important thing is being aware and taking advantage of the benefits. Looks like you’re doing a great job with that 🙂

    • MaggieBanks

      Our timing has been really good. But things are not looking great for the fiscal future of the state with the current state of oil.

  5. Alaska looks like a state where you get paid to live their. Do you pay any taxes at all?

    In Belgium, there is a massive wealth distribution, not comes close to any of the Alaska rules. Best we have: we get 250 euro/month for our kids. On the downside, new energy taxes now cost us 300eur/month…

    • MaggieBanks

      We get no money for our children other than the PFD if you count that. But Alaska does pay really high property taxes and our cost of living is really high because everything has to be shipped up, including gas because we produce the oil, but have no refinery, so it gets sent elsewhere to be refined and then shipped back up!

  6. Given that you’re so far from the rest of the country (but you can see Russia from your house!), it only seems fair that they would give you perks to like in AK. But seeing the full list of perks all together, it’s quite impressive! We certainly don’t get those benefits where we live — not even close! — but we get a lot of intangibles that make us love where we live and make us willing to pay the price. 🙂 Can’t wait to visit you up there, though!

    • MaggieBanks

      I love the financial perks of living in Alaska, but like I said, things are going to change! But, the non-financial benefits (seeing whales, moose in the yard), etc. still make it all work it.

  7. Kim from Philadelphia

    Well, I can’t think of too many financial incentives based on living in PA; we do have the benefits of being minutes from the city (Philadelphia) and cost of living is definitely lower than the NYC suburbs.
    We are in a good location for road trips (Boston- 5 hours away, NYC 1.5, DC-2.5) so that’s a plus.

    • MaggieBanks

      Road trips are a definite plus. We don’t have that luxury. We can road trip to tiny towns and wildlife, but no landmarks.

  8. I soooooo miss the financial incentives. I miss the PFD and the no sales tax thing, and I REALLY miss dipnetting. I say that, but I actually only did it once, in Kenai. I caught so much fish that my husband got sick of it and to this day he’s not as keen on salmon as he used to be. Prolly a good thing, since it’s not as cheap here in CO as it was in AK. Oh well. At least I can actually grow tomatoes and corn here. 🙂

    • MaggieBanks

      I love dipnetting so much! And I’m always nervous we’ll get sick of salmon, but we eat it weekly and everyone still loves it. I was careful to never eat salmon while pregnant so that I wouldn’t get nauseated by it (to this day I can’t eat ground beef because of a pregnancy).

  9. That’s a great question. I’d have to go digging to find financial benefits. I’m always in shock over the price of rent and the housing market here. Plus, this town is currently in a development explosion. Nothing seems particularly inexpensive, except for flights out from our airport. It’s much cheaper to fly out of here than in most of the other cities I’ve lived.

    I suppose there is a lot of opportunity here. Unemployment – in this city – is low. There are jobs. It was the only major city in the state that wasn’t “underwater” after the crash. But now I want to know hard numbers.

    • MaggieBanks

      Yes, living expenses are quite high up here as well. We also have a benefit of low unemployment (currently…), but flights are definitely not routinely cheap into and out of Alaska. 🙂

  10. Those sound like some pretty enticing perks to be able to live there. The subsistence fishing is pretty awesome, especially getting to dip net. I think we’d go pretty hungry if I had to subsistence fish. 🙂 That or I’d get way better, really quick, lol. I remember when I moved from KY to Denver and in KY there was SO much within a 5-8 hr drive, Cincinnati, Atlanta, Chattanooga (amazing aquarium if you’re ever there), Pittsburgh, St. Louis, the Atlantic ocean…. When I got to Denver, it felt like except for the mtn towns, everything else was over 10-12 hrs away. It was different getting used to it, but I just dove into the mountains, so that helped buffer that feeling some. I definitely understand the not being able to drive to as much landmark, cool type stuff though.

    • MaggieBanks

      The dipnetting is my favorite. It’s super fun and if they fish are running hard, it is not hard to catch at all! The first year, I caught one fish within ten minutes and took a million pictures with it (it was tiny) because I was pretty sure I wouldn’t catch another. Then I got in and caught another 11 (all way bigger than the first one) in less than an hour.

  11. Whoa, I had no idea you guys didn’t have an income tax — crazy!

    In my opinion Massachusetts is a great place to save money — but for kind of opposite reasons as Alaska. We are BIG into taxes here, which means more money out of your paycheck, but on the other hand it means there are lots of public services available, more than in a lot of other states. Plus being able to rely on public transportation to get around Boston saves me a ton of money (assuming I can keep it up!!). Plus we’re near NH, which also has no sales tax (I grew up in NH, so to me no sales tax seems normal). The last time I bought a computer I drove across the state line and saved a huge chunk of change.

    • MaggieBanks

      I love your perspective! We have great bike trails and the city bus system is pretty good, but nothing to write home about. 🙂 And I absolutely love no sales tax. Once you grow up with it, you can’t go back!

  12. Don

    No income tax? Oh my, how do they pay for the roads!? 😉

    • MaggieBanks

      Property tax and oil income… which is why they’re talking about changing some things…

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