What Alaska residents actually pay
Alaska has no state income tax on wages. That removes a layer — but federal AMT, federal capital gains, and the 3.8% Net Investment Income Tax still apply, and a prior state may still have a claim.
No state income tax. Dividends from the Permanent Fund may affect federal ordinary income.
Federal AMT on the bargain element
Exercising ISOs and holding the shares creates AMT "preference income" equal to the spread between fair market value at exercise and your strike price. That's the bargain element. It doesn't show up on a W-2, and many people discover it only when their CPA calculates AMT in April.
Frequently asked
- Does Alaska tax RSU income the same as wages?
- Alaska has no state income tax on wages, so RSU ordinary income is federal-only. Note that Washington residents still owe the 7% state long-term capital gains tax on sales above the threshold, and other states may claw back some income if your grant pre-dated your move.
- What happens if I exercise ISOs while living in Alaska?
- Alaska does not run a separate state AMT, so only federal AMT applies. You still need to model the bargain element carefully if you plan a cashless exercise-and-sell.
- I moved to Alaska from another state. Who taxes my vesting RSUs?
- Most high-tax states (CA, NY, MA) source RSU ordinary income to workdays between grant and vest. If your grant pre-dates your Alaska move, expect the old state to tax the portion of each tranche attributable to workdays earned there. Alaska taxes the remainder.
- Can I reduce Alaska taxes by timing my RSU sales?
- Alaska has no state income tax, so sale timing affects only your federal bill. NIIT and federal capital-gains brackets are still in play.
Related
- RSU taxes — Alaska
- Capital gains tax — Alaska
- QSBS — Alaska
- Moving to or from Alaska with unvested equity: trailing nexus rules — Alaska
- RSU vesting schedules — Alaska
- ESPP taxation — Alaska
- NSO exercises and state tax — Alaska
- 401(k) and retirement accounts — Alaska
- Leaving Alaska: how to cleanly break residency before a liquidity event — Alaska
- Alaska equity-comp overview