What’s the cost of living in Alaska?

Summary

What is the overall average cost of living in Alaska?

The cost of living in Alaska is higher than the national average. Let’s look at its two major centers – including the state’s largest city, Anchorage.

Fairbanks is 33 percent higher overall than the national average, and Anchorage is 28 percent higher overall. It's estimated Alaska ranks as the fourth most expensive state or district – just behind New York, Washington DC, and Hawaii.

It’s worth noting that the cost of living in Alaska can be offset by the yearly Permanent Fund Dividend paid to Alaskan residents.

How much are housing costs in Alaska?

Homes tend to cost slightly more in Alaska than in the rest of the United States. Realtor.com found that the median home value for 2021–22 was $385,000 – ten percent increase over that year. Some urban hotspots were higher still.

The rental story is slightly different. Alaska is a little cheaper than the rest of the United States, with a one-bedroom apartment costing around $962 per month, according to Rentdata.org.

Here’s a comparison between home prices and apartment rentals in three key Alaskan cities.

How much do utilities cost in Alaska?

Alaska is not a state to move to for cheap utilities. The Anchorage Economic Development Corporation concluded that gas and electricity bills were 33 percent higher than the national average.

In 2022, the average monthly utility bill in the United States was around $240; in Anchorage, that figure was $270.28. This encompasses electricity, gas, and water.

These costs can add up, especially when you factor in the harsh Alaska weather. The temperature in Alaska can drop to as low as between 0°F  and -30°F winter, so it’s important to keep warm. This, in turn, can impact your overall cost of living. Many Alaskan residents have several fuel alternatives for their home – electricity, fuel oil, natural gas, and wood – which they switch between, depending on prices and conditions.

What are the average grocery and food costs in Alaska?

Living in Alaska, you can expect to spend more on groceries and food. Most things have to be shipped in, so you would expect to pay more. The Missouri Economic Research and Information Center rank Alaska as the second most expensive state for groceries in the United States.

Within the state, there are price differences. For example, the University of Alaska Fairbanks found that in Anchorage, groceries for a family of four cost $211, which is $5 more than Fairbanks and $185 less than Bethel.

The chart shows how basics stack up in Anchorage compared with two other American cities.

How can I manage my cost of living in Alaska?

Whether you’re moving to Alaska or currently living in the state and want to get a better handle on your finances, a financial advisor can help you better manage your money. From planning for retirement to getting your investments in order, they will work with you to create a plan based on your unique circumstances.

You can find your perfect financial advisor with Unbiased. By answering a few questions, our match flow will find an SEC-regulated financial advisor perfectly suited to your needs. Find your financial advisor here.

How much are transportation costs in Alaska?

Alaska is the largest state in the country, with a limited public transport system and plenty of extreme weather. As a result, it places a special emphasis on running your own vehicle – particularly one that can deal with adverse road conditions such as snow and ice.

Data from GasBuddy reveals that Alaska has the sixth-highest average price for gas in the country, at $3.36 per gallon. On the positive side, Insure.com reported in 2019 that the average cost of car insurance was $1,183 – significantly below the national average of $1,457.

In Alaska, many places are simply inaccessible by road. Even Juneau, the capital, can only be reached by plane or ferry. Traveling around Alaska has its challenges, one of which is cost.

How much does healthcare cost in Alaska?

Alaskans pay above the national average for healthcare. In fact, the Health Care Cost Institute has calculated that prices in the Anchorage area are 82 percent higher than the national median.

When it comes to private company employees, the story is similar. They contribute $99 more than the national average for single-coverage healthcare. One driver of these high costs is the scarcity of providers, which means there’s a lack of competition.

If you’re looking to move to Alaska and work, it could pay to seek a job where your employer pays your health premium – many Alaskan residents save money this way.

What are the average childcare costs in Alaska?

In Alaska, you will pay $12,120 annually infant care. According to the Economic Policy Institute, this is 67.8 percent more than in-state tuition for a four-year college. For a four-year-old, the cost is closer to $10,000 a year. Unsurprisingly, due to the cost, childcare is unaffordable for many families in Alaska.

For those who can afford childcare, you won’t be surprised to learn that the larger urban centers have the highest demand and prices – waiting lists are not uncommon.

Here you can see how Alaska compares with a cross-section of key American states.

How much tax will I pay in Alaska?

When it comes to taxation, the news is good. You won’t have to pay state income tax at all. That means you’re potentially saving up to 13 percent of your hard-earned dollars compared with a high-income tax state such as California.

Some states with no income tax – such as Tennessee – make up for it by charging a hefty sales tax, but you won’t find that in Alaska.

WalletHub has ranked Alaska as the state with the lowest tax burden in the United States. Factor in the annual Permanent Fund Dividend, which in 2022 was $2,622, plus an energy rebate of $662, and your cost of living is coming down.

How much money do you need to live comfortably in Alaska?

Alaska is one of the most expensive states to live in. Housing, groceries, healthcare, utilities, and transport are all above the national average.

So how much money do you need? The average salary in Alaska is $61,670 per year, whereas average personal consumption is $48,739, so if you can hit that average or above, you’ll be able to live comfortably in Alaska.

The bottom line

You’ll need to weigh the advantages and disadvantages carefully when considering living in Alaska. The jaw-dropping scenery and potential for adventure are hard to beat, but you do end up paying for these natural assets. It all depends on your personal finances and life priorities.

Get expert financial advice and learn more about the cost of living and how to manage it with an SEC-regulated advisor. Let Unbiased match you with the best financial advisor for your needs.