The Frontier state might not have many people, but it’s still the dream place for some. If you’re one of those with Alaska on their bucket list, you’ll want to know what it’s like to live here. So, how much money do you need to live comfortably in Alaska?
The amount you need to live comfortably in Alaska depends on your situation. The state is costly, and an individual and a family will need an annual income of $34,786 and $96,146, respectively. Most money goes into housing, transportation, food, childcare, utilities, healthcare, and miscellaneous.
The state doesn’t charge income tax and pays its residents stipends annually through the Permanent Fund Dividend to compensate for the high costs. Here, we look at the amount you need to live comfortably in Alaska.
Cost of living in Alaska
Alaska is an expensive place to stay. This is due to several reasons, including its isolation, remoteness, and harsh living conditions. But all these reasons also make some people want to move here. If you’re planning to move here, you should know it’s the 7th most expensive state in the US. According to the Bureau of Economic Analysis, the average cost of personal consumption in the state based on 2020 data was $48,739 annually. The overall cost of living here is 25.8% above the national average.
Typical Expenses in Alaska
Still considering living here despite the high cost of living, then you should know what you’ll be spending on. This could help you manage your expenses more carefully. They include:
Homes here don’t come cheap because they’re not built cheap. Although the state has a vibrant logging industry, some other construction materials must be shipped from other parts of the United States. Data from the Department of Labor and Workforce Development puts the average sales price of a single-family house at $388,648 in 2021.
The location also matters greatly. The average price of homes in Anchorage, the biggest city in the state, was $436,577, and Juneau was $475,780 in the same year. Regardless of where you choose to Live, Alaska is a tight-knit community due to its low population.
However, the state average home price on Zillow is below the national average. Zillow estimates that the typical home value here is $317,905, and it’s also one of few states where home prices haven’t increased significantly. You’ll spend an average of $806 to $1,933 on monthly housing in Alaska. In Anchorage, the average rent is $1,208, and only 1% of the homes in the city cost above $2,000.
The average monthly cost of utilities in Alaska is $411 per month. Internet and cable take the most of the cost at $158. But electricity is quite expensive here too at $125. Gas costs about $70, and water costs $68. However, these are just average prices and don’t necessarily mean that’s what you’ll pay.
The global energy crunch means that energy costs in Alaska are higher. In Anchorage, the average amount you’ll spend on basic utilities is $23781. Basic utilities include electricity, cooling, garbage, and water. Internet and cable here cost $123.30.
Estimates from the Bureau of Economic Analysis put the average cost of food per person at $4,042. This means that one person will spend around $337 monthly on food. But where you live in the state will also affect your food bills. Anchorage is usually cheaper for food due to its size and accessibility. The places where food and groceries are most expensive are the remote areas. Among cities, Kodiak and Juneau have the highest cost of groceries.
One of the challenges anyone who chooses to live in Alaska will face is commuting. Getting around in this state is a challenge, and there are very limited options in some cases. However, the MIT Living Wage calculation states that the average cost for transportation annually ranges between $4900 and $13,317.
This depends mostly on the size of your family. A single person spends $4,900. A couple of two working adults spend $8,987. A family of two working adults with two children will spend $13,317.
The Bureau of Economic Analysis 2020 report on personal consumption puts the average cost of healthcare per capita at $10,483. This is merely an average cost, and your actual cost will depend on several factors.
According to the MIT Living Wage calculation, childcare in Alaska will cost $8,788 per child. This makes Alaska one of the country’s most expensive places to raise a child. But you might be able to get some child care assistance to cover part of the costs.
Alaska doesn’t have a state income or sales tax, but residents pay federal taxes. The maximum local sales tax is 7.5%. The average is 1.76%. The state has one of the best tax rates in the country. Still, people here will spend between $4,853 and $11,824 on federal taxes.
8. Miscellaneous Costs
This could take up the largest chunk of your spending. But if you want to live comfortably, it’s also something you have to plan for. There are lots of fun places to go to in the state. The good thing about miscellaneous spending is that you can cut it to your size.
Living Wage in Alaska
The living wage is what you need to survive in Alaska. The annual income varies between $34,786 and $96,146.
- A single person – $34,786
- A couple with one working adult – $53,546
- A couple of two working adults – $53,546
- A family of two working adults with two children – $96,146
Alaska is the fourth-least affordable state in the country, according to the US News affordability rankings. The report considered the cost of living with the money available to most households. It turns out that most Alaskans don’t have enough to live here comfortably.
The median household income in 2020 was $77,790, while its per capita income was $37,094. This is fairly high. But still barely enough for most people in the state,
Fortunately, the state offsets some of the cost with low taxes and gives Permanent Fund Dividends to eligible residents annually.
Alaska might be your dream place to live. But you should know that dreams don’t come cheap. The state is one of the country’s least affordable places to live. Fortunately, the median income here is also higher than the national average and compensates to an extent for the cost of living.