As of 2011, Alaska, along with six other states, doesn't require residents to pay income taxes. Oil taxes fund most state functions. No tax forms are required from private residents, although corporations must pay an income tax based on their federal taxes plus adjustments.
No Income Tax
In 1980, after large-scale oil drilling began in Alaska, the state repealed its personal income tax. There is also no general sales tax, though the state collects tax on gas and cigarettes Alaskan cities and boroughs (which are like counties) can sales taxes and property taxes. Alaskans are the least-taxed state residents in the country.
For every dollar Alaskans send to Washington in Federal income taxes, they get back $1.85. This ratio puts Alaska third in the nation among "beneficiary states."
Alaska taxes corporations in 10 separate tax brackets topping out at 9.4 percent. The Tax Foundation reports this as the fifth highest rate in the nation. Per capita collections in the 2009 fiscal year were $912, the nation's highest.
Permanent Dividend Fund
Residents receive services from their state funding by oil revenue. In fact, the state splits oil revenue with residents each year through the Permanent Fund Dividend. In 2010, the payout to each legal resident was $1,281. The state considers residents to be anyone who has lived in Alaska for an entire calendar year, and remains in the state for roughly six months a year.
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