Does Alaska Pay You To Live There?
Living in Alaska has its pros and cons, as with any other state. Apart from having a few citizens and being far away from the rest of the country, Alaska is one of the coldest places in the world.
However, to live in this freezing state means you get to save a lot of money due to their lower tax rate implementations. You can also enjoy life with its unique sceneries like wildlife, mountains and northern lights, to name a few.
The government of Alaska also pays anyone who stays there for at least a year without committing any crimes or felonies. If you are interested, make it a point to research Alaska and see if living there is a good idea.
Where Exactly Is Alaska Located?
Alaska is a constituent U.S territory located on the extreme northwest of the North American continent. Nearly one-third is in the Arctic Circle, and approximately four-fifths of it is underlined by permafrost.
Alaska, attaining statehood, expanded the size of the U.S. by almost one-fifth. This involved finding large tracts of undiscovered land and fresh resources.
Why Does The Government Pay People To Live in Alaska?
The truth is, it’s not just a few cities that pay you to live in Alaska, but in fact, it’s the whole state. This is part of an agreement done by the state of Alaska in 1976 called the “Permanent Fund Dividend” or PFD, in which it cuts each member of the population a check each year.
Another reason this occurs, is due to oil royalties. Oil royalties are drilled on government land, which means the people are the real owners and deserve to benefit.
The logic here is that Alaska gets a lot more oil than other countries. And since oil is a natural resource, it should belong to the residents instead of the government.
The subtotal of what they get changes from year to year depending on the oil production monies. The simple answer is the more oil, then the more money the residents will get.
People living in Alaska don’t consider these contributions as “free money,” though. In fact, they believe that they deserve it. They think they are getting money that is rightfully theirs as they own a portion of a natural resource.
How To Get Paid To Live In Alaska
To be eligible for the Permanent Fund Dividend (PFD), you must have been a resident in Alaska for at least a year (or 190 calendar days), and have the intention to stay in the state for life. The eligibility of Children below 18 is based on the parent or guardian.
It is important to note that you can no longer claim residency in any other country or state once you apply for this. You cannot be out of the state for more than 180 calendar days as well. However, certain conditions are acceptable, such as going to college, military service, medical treatment, etc.
You must also not commit any crimes during your stay, or your cut will be rebuked. There is another strange rule, that you must have been in Alaska for 72 straight hours at least once, during the year you are claiming eligibility.
If you meet all of these requirements, you will receive a yearly dividend from the government of Alaska. Unfortunately, this money doesn’t go nearly as far as you would think, as the cost of living in Alaska is abnormally high.
How Much Can You Get Paid To Live In Alaska?
The amount of money you can receive from staying in Alaska has gone up every year. Since 1982, the Permanent Fund Dividend amounts have ranged from $331 to $2,072 per individual. Back then, its average reached around 1,200 dollars. Today, PFD payouts range from about 2500-3000 dollars.
What Do You Use The Money For?
Although many residents use the money they receive to pay for their living costs and expenses, save it for big purchases, retirement or go on relaxing vacations, spending the PFD payout is entirely up to you! Thanks to the absence of the statewide income tax in Alaska, whatever funds you receive won’t be taxed.
However, you still have to pay for the federal income tax, which gets claimed as regular income for adults and children.
What Are The Residency Requirements In Alaska?
Of course, you can’t possibly apply for the PFD payout without being a resident in the state — one of the biggest requirements. You also need to prove your intention to live there for life. Listed below are the documents you can submit to verify it:
- ID (e.g., Alaska driver’s license)
- W2 or paystub as proof of employment
- vehicle registration (except for motorcycle)
- voter registration
- Proof of real estate purchase, ownership, lease or rental agreement under your name
- Shipping receipt or any proof of documents for moving household goods to Alaska
- Senior Benefits or Alaska Housing (if applicable)
Getting Paid To Live In Alaska: What’s The Catch?
Alaska’s population has increased gradually ever since this rule has been implemented, and the government has noticed that most people just travel and stay in Alaska for the money and end up overly abusing these perks. Hence, the government of Alaska has been trying harder not to make these payments anymore.
But don’t fret! They may plan to put a halt on this rule soon, but nothing has been finalized yet.
Moreover, it is worth noting that the cost of living in Alaska is higher than any other state or country because it is very private and isolated. Expenses such as gasoline, shipping and many more are almost double the price because their resources are limited and far away from the rest of the country. Hence, unless you have a stable job and are financially stable, the PFD payout may not be worth it in the long run.
Is Living in Alaska Right For You?
Ultimately, Alaska does indeed pay you to live there for good, but it comes with many risks and uncertainties. If you are financially secure and just want to live there for the experience and change in scenery, it is a good choice.
If you have a stable job and a happy life wherever you are, it may be best to just hold onto it. However, if you’re still interested in living in Alaska despite reading up on the possible risks and feeling of isolation that can arise from this experience, then you are making a great choice living in one of the best places in the world.
What’s The Cost Of Living In Alaska?
Generally, it’s more expensive to live in Alaska. However, since there is no state income tax (or state sales tax), the costs do even out, somewhat.
Generally, the more expensive things in Alaska are food, housing, and utilities. Because Alaska is so remote, these areas are generally much more costly.
Just as in Hawaii, getting any type of groceries to Alaska is no small feat. Additionally, during a pandemic, it has become even more difficult to get regular shipments of groceries into the remote cities of Alaska.
Housing and utilities pose an equal problem, again due to the remote nature of Alaska’s wilderness. The climate (one of terrible cold) – also makes housing more expensive, and causes much more heat to be used, year-round.
The price of living is ultimately quite high, and is indeed above the national average. While you might normally be able to get by with fewer costs in a more civilized area, Alaska’s remoteness causes major losses for your wallet.
Can You Live In Alaska For Free?
You can neither move to Alaska (nor reside there) for free – but you can get paid to live in Alaska. This is because Alaska takes the Permanent Fund Division (which comes from the oil naturally found in the state) – and redistributes part of it to all of their citizens, each and every year.
Since you will be making this money, you may not be living for free – but at least some of your everyday costs will be covered. Alaska also does not have any sort of income tax for its citizens – nor does it have a sales tax.
This brings the average cost of living way down, which is when you start to get closer to the idea of “living in Alaska for free”. You should still think about if Alaska is the right climate and place for you, before you make any type of move.
How Much Do You Get Paid A Month To Live In Alaska?
While there is no set dollar amount for each resident, each month in Alaska – on average you might be able to expect around $1,500 per year to come in from the Alaska Permanent Fund.
This works out to be about $125 per month, that the government of Alaska gives you to live there. Of course, since the cost of living is typically higher in Alaska, this amount of money may not stretch as much as you think it would.
What State Will Pay You $10,000 To Move There?
Unlike Alaska, which pays you to be a resident – there are some states that pay you to simply relocate there. And these states will pay pretty large amounts – sometimes as much as $10,000.
In northwest Arkansas, new residents will be paid $10,000 to relocate to the area. The authorities in this area want to attract qualified workers, and also want help in expanding the local economy.
Where good citizens live, profitable businesses usually follow. The cost of living in this area of Arkansas is also low, which means you can likely bank quite a bit of the $10,000 you get.
There are other current examples of money being used to bring in new residents. Vermont, Italy, and Oklahoma all have programs that pay new residents to move there.
The coronavirus pandemic has also pushed more people from cities, and into more rural areas. Many are seeking an increased work-life balance, though it also makes financial sense to move to a less expensive area, due to the virus causing massive economic downturn.
What State Is The Cheapest To Live In?
Mississippi is the least expensive state to live in, hands down. With costs almost 20% below the national average, it’s a great place to save your money.
Housing costs are low, child care costs are low, and utilities are even very affordable. While some other states are close, Mississippi is overall the cheapest state to live in.
Next on the list would be Arkansas, which boasts some of the lowest housing costs in America. Unfortunately, the average salary in Arkansas is also one of the lowest in the country.
On top of this, many states impose no state income tax. States like Florida, for example, do not tax any of their citizen’s income.
However, Florida has higher taxes in other areas, and also has poorer roads, public school systems, and other public services. While we all hate taxes, they do go to good programs (like fixing potholes, cleaning up our communities, and funding better public libraries.
While it might seem ideal at first to not pay state income taxes, in the long run other costs usually even out the difference. This is definitely the case in Alaska, which has a very high cost of living, comparatively.
Is It Expensive To Live In Alaska?
The cost of everything is more expensive in Alaska. This means housing, utilities, groceries, and more.
Though Alaska does give residents a yearly stipend, this will usually only counteract the higher cost of living that is naturally prevalent across the state. Since there is no state income tax, and no state sales tax – the overall cost comes out in a wash.
For most people, we’d recommend that they have some solid reasons why they need to live in Alaska. This is because, for the average person, Alaska has many downsides – but not many widespread upsides.
For example, the job market is very different in Alaska. Additionally, so is the climate – most people do not enjoy being cold for the majority of each year.
State Taxes In Alaska
Alaska is a unique state, in that they are the only one without a state income tax, as well as no state sales tax. This is largely due to their huge oil revenues, which are used to pay for things that state taxes would usually finance.
The PFD (Permanent Fund Division) actually pays citizens of Alaska to live there every year, which is pretty much the opposite of state income tax. However, Alaska does have a few unusual state taxes, like a vehicle rental tax, as well as an excise tax.
While the state does not impose any taxes, local taxes are sometimes levied on citizens. Additionally, you can expect to pay other unusual taxes, like raw fish taxes, hotel “bed” taxes, and even tire taxes.
Alaska’s Permanent Fund Dividend (PFD)
The PFD gives each citizen a yearly dividend from their state’s oil revenue, which incentivizes residents to continue to live there. Ironically, before oil could be extracted in Alaska, they had some of the highest state income tax rates in the country.
Their republican governor at the time proposed a solution to these high taxes, and that resulted in the PFD. Ironically, this dividend eliminated state income taxes altogether, and now Alaska is one of the only states in the nation to not impose state income taxes on any of their residents.
Other Factors To Consider
Due to COVID-19, many of our lives have been upended. If you’re looking to move, Alaska does offer some incentives to citizens who move there.
Other places (like Tulsa, OK) may also pay new citizens to relocate to their city. However, you should always pay attention to the details of these types of deals.
Generally speaking, the United States is a safer place to live than almost any other country in the world. So usually these stipend payments are pretty good deals.
If you move anywhere that pays you to live there, you will still be subject to state taxes. For example, the Alaska department of revenue will expect you to pay your taxes, should you choose to live there.
While a down payment to move somewhere sounds good, much like a student loan – there are usually strings attached. However, if you need money, you may be able to make slightly more on your annual dividend by moving to a place that pays you to relocate.
With coronavirus especially, many Americans have been looking to cut as many costs as possible. Moving to a new home may seem like a cost to avoid, but if a city (or state) is willing to pay you to relocate (or giving you other financial incentives) – you may come out ahead.
Another caveat is to make sure you meet the eligibility requirements. These will vary by the state and city.
For example, Kansas, San Francisco, and Nebraska may all give you a free lot (or even free land) – but they will all likely have different eligibility requirements. New residents in states may also have to still pay taxes for last year to their previous state.
Even if you are relocating, the tax man will always get his cut.
The Bottom Line On Getting Paid To Live In Alaska
There you have it – everything you need to know about getting some extra money, all just for moving to one of the coldest places on earth. There are, of course, many misconceptions about Alaska.
For starters, things can be more expensive there. This covers normal, everyday costs – like food, internet, electricity, etc.
The cost of living, therefore, is higher. That being said, getting paid to live anywhere can be nice.
It’s extra money that you can count on – no matter what. If you don’t mind the cold, and your job can be done remotely (or there’s plenty of jobs in your field) – getting paid for living Alaska may just be for you.
But if you’re worried about taxes in Alaska, always opt for a qualified tax professional.
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