What’s the cost of living in Alaska?

While Alaska may be a special place to visit, if you move there, you’ll want to dig deeper into how much life in Alaska will cost you. Is it an affordable state? Where does it sit in terms of the average cost of living in the United States?

The average cost of living in Arizona overall

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.

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—a 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.

Utility costs 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 keeping warm during the Alaskan winter. 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.

Groceries and food costs in Alaska

Groceries and food are fairly expensive in Alaska. 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.

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.

Healthcare costs 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.

Childcare costs in Alaska

In Alaska, you will pay $12,120 for annual infant care. You won’t be surprised to learn that the larger urban centers have the highest demand and prices—waiting lists are not uncommon.

As with healthcare, higher costs are not necessarily linked to a growing population but to relatively limited capacity and a lack of competition.

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

Taxes 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.

So 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.

Moving home to a new state is a big step, with plenty to consider—especially regarding your finances. The best first step is to talk to a financial advisor before taking the plunge. Contact Unbiased, and we’ll find the right professional support for you.