Are you thinking about moving to Alaska, the final frontier?
If you’re an outdoorsman and a lover of nature, then Alaska may be a great place for you to live.
The air is pure and the sky is crystal clear at night. You can see stars and heavenly bodies you never even knew existed. The majestic landscapes are truly some of the best real estate that Mother Nature has to offer.
A substantial portion of the state is still natural and undeveloped. You can also enjoy the Northern Lights, fresh water streams, snowy mountains, breathtaking glaciers, and magical forests.
Of the many adventures available in the state, hunting and fishing are some of your most exciting choices.
You can go fishing for halibut, salmon, trout, and Arctic char as well as go hunting for moose and bears. You can also hunt for caribou, wolverines, wolves, musk oxen, water fowl, and mountain goats.
However, you may want consider being a permanent resident of the state because of the financial advantages available to its citizens. In this article, we will take a look at the top 10 financial benefits of living in Alaska.
1. The Permanent Fund Dividend
If you want to be a resident of Alaska, they will give you a certain amount of money every year to live there. Each resident of Alaska receives annual funds from the PFD for approximately $1,000 to $2,000.
In order to qualify for this money, you must live in Alaska for at least a year (January 1 to December 31). In addition, you must also make Alaska your permanent place of residence.
The citizens of Alaska are the shareholders of the Permanent Fund and receive the dividend. Announced in September, the distribution of the dividend occurs a month later.
As you can imagine, this annual distribution of the funds creates a shopping spree similar to Black Friday. However, you need to be aware that this money is taxable.
Calculation of the Dividend
The calculation of the total amount of money paid out is based on a wide variety of factors. A five-year average of the performance of the Permanent Fund is the first thing needed to calculate the correct amount. It varies considerably depending on things like the stock market as well as several other variables.
These five steps determine the Permanent Fund Dividend:
- Take the Fund Statutory Net Income from the last four years and add this to the current year.
- Take the amount from the first step and multiply by 21 percent
- Divide the amount from the second step by two
- Take the amount from the third step and subtract the expenses of the prior year
- Take the amount from the fourth step and divide it by the number of applicants
The Alaska Department of Revenue, Permanent Fund Dividend Division determines eligibility for the distribution of this dividend. This dividend is from the investment earnings of mineral royalties. It allows for the sharing of the State minerals revenue in order to help the all of the people living in the state.
To be eligible for the PFD in 2019, you must be able to answer yes to all of these questions:
- Were you an Alaska resident for the entire year of 2018?
- Were you physically present in the state for 72 consecutive hours during 2017 or 2018?
- If you left Alaska for more than three months, was it an allowable absence?
- When you apply for the PFD in 2019, do you have the intent to live in Alaska indefinitely?
In addition, you must agree completely with the following statements:
- You have not claimed residency in another state or country since the last day of 2017
- You have not been incarcerated in 2018 because of a felony conviction
- In 2018, you were not sentenced for a felony conviction in 2018
- You have not been incarcerated in 2018 because of a misdemeanor conviction in Alaska
It is possible for you to leave Alaska and still be eligible for a dividend. If you are gone for more than three months for a reason not listed in Alaska Statute 43.23.008(a), you will not be eligible.
You should also know that you must return to Alaska for three days every two years to retain eligibility. In addition, you must return for a month every five years.
2. No Personal Income Tax
Many people have to pay high income taxes, and this keeps them from saving money. If you want a break from the burden created by high taxes, there is good news for you.
Alaska does not have a personal income tax. This means that there is no employee withholding for state income tax.
Because there is no income tax, Alaska is an attractive place to live for individuals who wish to keep more of the money they earn. That means that it is possible to save a lot of money by relocating in this state.
Collective Benefits of Eliminating Income Tax
It is also interesting to note, however, that there is another huge advantage of not having an individual income tax. This is because states without an income tax gradually evolve into areas that experience extremely high rates of growth. They are much better at creating new jobs. These states also manage to keep their skilled workers from moving to other locations.
These are the kinds of economic occurrences that benefit everyone in the state. This is also another strong financial incentive to relocate to Alaska.
For the last ten years, the nine states that do not have a personal income tax have outperformed the nine states with the highest taxes. This superior performance was found in the areas of population growth, new job creation and (surprisingly enough) revenues from taxes.
3. No State Sales Tax
Sales tax is a tax that is charged to the consumer for the sale of goods or services. Most Americans pay a sales tax that is between three to seven percent.
You should be aware, however, that there is good news for those who are weary of these high taxes. Alaska is one of five states that does not have a state sales tax. The other four states are Montana, Delaware, Oregon, and New Hampshire.
It should also be noted that several of the states that have no state sales taxes have higher income taxes. In addition, some of these states allow localities to levy a sales tax.
This is the case with Alaska, which permits localities to impose a sales tax of up to 1.76 percent in certain areas. Still, because these local taxes so small, Alaska is extremely tax efficient.
4. No Inheritance Tax
Residents of Alaska do not have to worry about an inheritance tax or a state estate tax.
Although Alaska does not have an inheritance tax, you may still end up owing inheritance taxes to other states. This could happen if you inherit something from a person who lived somewhere where there is an inheritance tax.
If you do inherit something from one of these states, you could get a tax bill from that state. It would be determined by the value of the thing you inherited and your relationship to the deceased individual. Surviving spouses are not required to pay inheritance tax. Also, there are certain states that will exempt small inheritances.
Federal Estate Tax
There may also be a federal estate tax, but this only applies if the deceased individual left assets of over $11,400,000. This tax comes out of the estate of the individual who died. There are not many estates in the country that owe this tax.
An individual who dies in Alaska with less than the exemption amount does not owe a federal estate tax. This is great to know because in Alaska there is no state estate tax. What this means is that the beneficiaries of this person inherit their property free of all of these sorts of taxes.
In addition, the heirs of this deceased individual are not required to pay income tax on inherited assets. This is because this inherited property is not what the IRS calls ordinary income.
However, these exemptions do not include inherited retirement accounts. These sorts of exemptions become subject to income tax once the funds have been withdrawn.
5. Property Tax Exemption for Senior Citizens
Senior citizen looking to retire in Alaska can enjoy a major tax break. It comes in the form of a $150,000 property tax exemption for the elderly population of the state.
How to Apply
If you want to apply for this tax exemption, you must be 65 years old. You must show proof of age the first time that you are applying by presenting one of the following items:
- Alaska driver’s license
- Alaska state ID
- birth certificate
- military ID
Senior citizens who have already qualified do not have to file an application for successive tax years. This is true as long as there is no change in the factors affecting their qualifications.
Widows of Senior Citizens
If you are a widow of someone who had previously participated for this program, you will qualify for an exemption. However, you will have to provide copies of your marriage certificate and the death certificate of your spouse.
6. Property Tax Exemption for Disabled Veterans
Alaska is a patriotic state that respects the military and honors its members accordingly. One of the numerous financial aspects of this tribute is the fact that the property tax exemption of $150,000 also applies to disabled veterans.
In order to qualify for this tax break, a disabled American veteran who is a resident of Alaska for at least a year qualifies for this exemption. It is also required that their disability must have been incurred in the line of duty. In addition, their disability must have been rated as greater than 50 percent.
7. Subsistence Fishing and Hunting
It is not unusual for residents of Alaska to eat delicacies like fresh salmon once a week. There is a yearly allowance of fish that every resident in the state is allowed to catch. This right to fish for free is commonly known as dipnetting. The head of the household is allowed to catch 25 fish per year. Every member of the household is able to get ten fish every year.
For many centuries, fishing and hunting have been important aspects of many of the cultures that live in Alaska. These cultural groups include the Yupik, Aleaut, Haida, Inupiat, Tsimshian, Athabascan, Tlingit, and Alutiiq tribes.
Subsistence hunting occurs throughout the year and supports the traditions of the cultures in the state. For many residents, these practices are crucial to their security and economic welfare. It is also a part of the daily routines of many people.
The Alaska Department of Fish and Game
This department makes management and policy decisions so as to provide programs of learning and education. It is also interesting to note that this department places a high priority on interacting with the public.
This state department manages over 740 fisheries, 32 special areas, and 26 game management units. It works to build upon science while promoting wildlife and fish management programs. This is done in order to find the best economic benefits and practical uses for the public.
The Mission Statement of the ADF&G
The mission of the ADF&G is to manage the wildlife in Alaska. A sustainable yield principle is one the ultimate goals that this organization tries to preserve. This is because the use of these resources directly benefit the well being of the citizens of Alaska.
The following items are some of the main concepts expressed by the guiding principles of this department:
- Provide for long-term opportunities for the use of Alaska′s fish and wildlife.
- Encourage public involvement in the decision making processes of this department
- Create a working environment that is based on respect between the public and the department.
- Continue to maintain quality and integrity so that the best information is available for examination
- Maintain high standards of professionalism in the staff of this department
- Continue to promote resource management
Protecting a Way of Life
In 1978, the state legislature passed a law stating that the fish and wildlife of Alaska are for subsistence. This was done so that the cultures in the state would be able to sustain their ways of life.
There is also a federal component of subsistence hunting and fishing. It is known as the Alaska National Interest Lands Conservation Act (ANILCA). Title VIII of this act is about the qualification of subsistence fishing and hunting on the federal public lands in the state.
You can hunt these all of these animals in the state of Alaska:
- dall sheep
- mountain goats
- sea lions
Remember that you must have harvest tags and hunting licenses to hunt these animals. In addition, you will need state and federal stamps if you want to hunt waterfowl.
8. Higher Than Average Minimum Wage
Set at $9.89 in 2019, the state of Alaska has a minimum wage that is higher than the national average. School bus drivers have a minimum wage that is two times higher than the regular amount.
Alaska Statute 23.10.050 – 23.10.150 establishes the standards for the minimum wages in the state.
List of Ineligible Individuals
Here is a complete list of the types of individuals who are not eligible to receive minimum wage:
- Handicapped individuals
- Student learners
- Individuals working in agriculture
- Individuals making a living by killing aquatic life, including shrimp pickers
- Workers employed in domestic services at a private residence
- Individuals employed by state, federal, or local governments
- Volunteers of nonprofit organizations
- Individuals who deliver newspapers
- Caretakers of properties that have not been in operation for four months or longer
- Executives and professionals as defined by the Fair Labor Standards Act
- Salesman working on commission
- Individuals searching for placer or hard rock minerals
- Citizens under the age of 18 employed for less than than 30 hours a week
- Individuals employed by a nonprofit to serve as a resident parent
- Independent cab drivers who work on contract on a flat rate basis
- Individuals who hold a license under AS 08.54 and are employed by a registered guide
- Workers employed as computer analysts, software engineers, or other similar jobs
- Individuals who volunteer to provide emergency medical services or ski patrol services
- Individuals who volunteer to serve full time for a fire department
- Students participating in a practicum of the University of Alaska as described under AS 14.40.065
- Individuals employed by a motor vehicle dealer to manage services
- People who trade, lease, or sell motor vehicles
9. Daily Overtime Pay
Alaska has a daily overtime pay policy if you work more than eight hours a day. Extra hours on that day will receive payment that is 150 percent greater than your normal wage. In other places, you have to work a 40-hour week before you receive overtime.
Seasonal employees usually work for five to six days a week for eight to ten hours a day. When you have several ten hour days every week, you can start to earn a lot more money.
Individuals Exempt From Overtime Pay
Exemptions from overtime includes those exempt from minimum wage and includes the following individuals:
- Individuals working for an employer who has less than four employees
- Individuals employed in packaging and handling of food products
- Employees working for mining operations employing where 12 or fewer people
- Individuals employed by an agricultural organization
- Individuals working for a newspaper with a circulation of 1,000 or less
- Switchboard operators working for public telephone exchanges with less than 750 stations
- Individuals handling public messages with communications revenue is not more than $500 per month
- Individuals working as seamen
- Employees working as outside buyers of eggs, poultry, eggs, milk, or cream
- Individuals working in a lumber or forestry operation that employers 12 or less people
- Casual employees as defined by the Commissioner of Labor
- Employees of a medical facility whose employment involves the provision of medical services
- Individuals who work under a flexible hour work plan
- Line haul truck drivers if the driver receives standard overtime pay
- Community health aides working for a regional or local health organization
- Flat-rate mechanics paid for more than 40 hours a week or eight hours a day
- Individuals working for an air carrier subject to the Railway Labor Act
10. Expensive Clothes Are Not Necessary
People living in the state of Alaska (as well as the city of Anchorage) lead a laid back lifestyle. It is not uncommon to see rich people walking into a nice restaurant wearing t-shirts and jeans. It is worthy to note, however, that there are not a lot of “fancy” restaurants to begin with.
You Do Not Need Costly Fashion to Express Social Status
It would be accurate to say that the residents of this state do not care much about fashion. This statement would apply to almost all of the people of Alaska, young and old, rich and poor.
There are exceptions to this, like adorable boutiques where elegant ladies can shop. However, clothing is not a symbol of status like it is in other parts of the country. Clothing items that really matter are things like insulated work boots and high-quality winter gloves.
The feeling of belonging to a social class is not very prominent in the state. There are rich people and working-class citizens, but you will not notice this based on their clothes.
Saving Money on Your Wardrobe
So basically, you don’t have to buy expensive clothes to impress anyone. Wear whatever you like. Your clothes do not matter to the residents of Alaska.
Therefore, your budget for clothing can be lowered. You can buy discounted items and used clothing for pennies on the dollar. With these kinds of savings, you will have money to spend on lots of other things.
When the summer solstice arrives, the city of Anchorage gets almost 20 hours of sunlight per day. This wonderful sunshine comes with pleasant climate conditions, and warm temperatures in the sixties. These types of weather conditions make activities such as hiking or riding bikes very appealing.
If you love nature, you will love Alaska. Although there are many financial advantages to living in this wonderful state, its greatest treasures are free.
So if you want to get away from it all, you may want to live where the caribou roam, and the salmon swim gracefully all day.