Alaska is the only state in the United States where a large part of the land mass of the state is not subject to a property tax. Although property tax is the primary method of raising revenues for the majority of the larger municipalities in the state, smaller municipalities favor a sales tax. This is due primarily to the fact that the smaller incorporated areas lack a sufficient tax base to support the property tax. The unincorporated areas of the state do not have the legal authority to levy a tax.
For those areas that do have a property tax, it must be assessed and taxed as authorized by AS 29.45.010 - .600. All property is taxable unless specifically exempted by law. Property required to be exempt from the property tax includes property owned by local, state, and federal governments, except that a private leasehold, contract, or other interest in that property, including the use of that property by an individual, company, or corporation, is taxable to the extent of that interest. Other required exemptions include senior citizens and disabled veterans, as well as property used for non-profit educational, religious, hospital, charitable and cemetery purposes. Required exemptions can be found in AS 29.45.030. Municipalities are given wide latitude to exempt all or some categories of personal property as well as other types or uses of property. These optional exemptions can be found in AS 29.45.050.
Property is required to be valued at market value each and every year as of January 1. Reinspection of property is to be made in accordance with a resolution or an ordinance of the local governing body but the inspection cycle should not exceed more than six (6) years.
What cities or boroughs levy a property tax?
Fourteen of the eighteen organized boroughs levy a property tax. Only eleven cities outside of organized boroughs levy a property tax. These twenty-five municipalities can be found on the Directory of Taxing Jurisdictions.
Are both real and personal property taxable in Alaska?
Yes. AS 29.45.010 allows for the assessment and taxation of both real and personal property. There are several municipalities that have chosen to exempt some or all categories of personal property. For a listing of those municipalities and categories, see the department's publication of "Alaska Taxable."
Can the tax rates be less in a borough for outlying, remote areas?
No. Under AS 29.45.090, property upon which a tax is levied is taxed at the same rate for the year throughout the municipality. This excludes service area rates since they are unique to each service area.
How is the mill rate or tax levy calculated?
The governing body (city council or the borough assembly) determines the budget requirements for a municipality and identifies all revenue sources. After all other revenue sources are identified and the budgeted amount is reduced by that amount, the residual is the amount required to be raised by the property tax. That amount is divided by the total assessed value and the result is identified as a "mill rate". A "mill" is 1/1000 of a dollar, so the mill rate simply states the amount of tax to be charged per $1,000 of assessed value. For example, a mill rate of 18.5 mills equates to $18.50 of tax per $1,000 of assessed value. Under this scenario, a property assessed at $100,000 would have a tax liability of $1,850 annually.
May I appeal the tax rate I have to pay?
You may not appeal the mill rate you have to pay. An appeal is limited to only the assessed value and the only grounds for an appeal is proof of unequal, excessive, improper or under-valuation. The tax is simply a matter of a mathematical calculation of the mill rate and the assessed value. Neither the assessor nor the Board of Equalization has the authority to set or reduce the tax rate, as that is set at the governing body level. The time to argue the tax rate is at the city/assembly budget hearings.
Is there a cap on the amount of property taxes that a municipality may levy?
Yes. In accordance with AS 29.45.090 a municipality may not levy a tax in excess of three percent (30 mills). This limitation does not apply to taxes pledged to pay for bonded debt or service areas, both of which are taxes requested by the electorate.
Alaska Administrative Code