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Alaska: Should Seniors Pay Sales Tax?

  • Sep 30, 2014 | Gail Cole

 Petersburg, Alaska.

People of a certain age are rewarded for their longevity. At 50, an AARP card may get you 20% off hotel rooms, 25% off car rentals, 30% off prescription glasses, and a free donut at Dunkin Donuts (with a large cup of coffee). Make it to 65 and official senior citizenship kicks in, providing reduced museum admission, movie tickets, and much, much more.

Benefits extend as far as taxes. In South Dakota for example, low income seniors are eligible for sales tax and property tax refunds. Both South Dakota and Kansas used to allow food sales tax refunds, but those were discontinued in recent years.

In Juneau and Petersburg, Alaska, people 65 and older do not currently have to pay local sales tax. Voters in Petersburg will have the opportunity to change that on October 7.

Petersburg Borough imposes a 6% local sales tax and collects roughly $3 million in sales tax revenue annually. According to Petersburg’s Municipal Finance Director Judy Tow, approximately $270,000 in sales tax revenue is lost each year due to the senior exemption. Right now, seniors comprise just over 15% of the borough’s population. By 2020, that percentage could double.

Some borough officials are looking for “a more fair way” to fund borough expenses such as the fire and police departments, roads and snowplows. Thus the birth of the measures below, which will be on the Petersburg October 7 Ballot:

  • Proposition 2 would eliminate new exemption cards after December 31, 2019. Current holders would keep their cards.
  • Proposition 3 would eliminate the exemption for seniors not residing in the borough.
  • Proposition 4 would limit the sales tax exemption to groceries and heating.
  • Proposition 5 would increase the sales tax exemption cap to sales over $2,000. The current cap is $1,200.
  • Proposition 6 would require seniors establish a one year residency and physical presence requirement to take advantage of the senior citizen sales tax exemption.

Tax committee member Lee Corrao worries that eliminating or reducing the sales tax exemption for seniors would “drive people more to the internet, where the city can’t tax them.” He notes that 6% “is a big deal right now.” He also questions an impending senior boom.

In Juneau, the Assembly tax exemption committee has also considered changing the city’s senior sales tax exemption. No proposals have as yet been put forth. Alaska does not have a state sales tax but numerous localities impose a local sales tax.

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photo credit: markbyzewski via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.