Paycheck Calculator Alaska - AK

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Alaska - AK Paycheck Calculator: Hourly and Salary

Alaska, the largest state of America, would have been 18th biggest in the world as a country. This state is known for its scalable mountains, wide-spread & beautiful national parks, and incredible wildlife.

Although it’s a fantastic tourist destination, living here as a resident could be difficult and costly as many towns and cities are inaccessible, especially in winter.

It's maybe due to the high cost of living or higher earnings from petroleum compared to other states in America, Alaska State doesn't charge any state income taxes on individuals. However, Apart from these perks, the Alaskans still have to deal with payroll taxes like federal taxes, whether it be an employer or employee. Moreover, employers may have to pay sales taxes to the municipalities, ranging between 1% and 7%.

Therefore, if you are an Alaskan and looking for a precise calculator along with a guide to calculating your payroll taxes, and take home paycheck amount, then you must continue reading.


Alaska Tax Facts:

  • Alaska is the only state of America that doesn’t charge an Alaska State Tax on the individuals.
  • The minimum wage in Alaska is raised to $9.89, from 2019, except for the Fairbanks town, having a slightly lower minimum wage of $9.80.
  • The lowest minimum wage in Alaska is $2.5 higher than the federal minimum wage.
  • The Median household income in Alaska is $76,114, according to the United States Census Bureau.
  • The average salary of an employee working in Alaska is $13.73 per hour that sums up to approx. $28,000 annually for 40 hours workweek.
  • One of the surprising facts about Alaska is that it pays its residents the money to live, from the Alaska Permanent Fund Corporation. Both adults, as well as children, can apply online for this money, known as the Permanent Fund Dividend (PFD).

How to calculate Paycheck in Alaska

The following are the steps that every employee and employee needs to consider to calculate paycheck for Hourly or fixed salary while working in Alaska.

Step 1: Determine the Pay Type

The first and foremost thing to calculate the paycheck is to determine the Pay Type. It is whether the employee is paid on:

  • Hourly basis: Employee is paid at an agreed hourly rate for the number of hours worked in a day or a week. Here the employee is paid overtime for every extra hour he/she works over regular hours. According to the Fair Labor Standard Act, regular hours are 8 hours a day or 40 hours a week, and for every extra hour, an employee must be paid at time and half of the regular hourly rate as overtime.
  • Salary basis: Employee is paid a fixed amount for a set number of days regardless of how many hours he/she works. Unfortunately, there is no law for paying overtime to a salaried employee.

Alaska State Laws for Pay Type:

  • There are no such state laws by Alaska to determine the Hour Worked, Regular Hours. Therefore, employers and employees must follow the guideline provided by U.S Wage and Hours Division and FLSA (Fair Labor Standard Act).
  • However, Alaska State Law does have laws to regulate overtime, which you will read in Step 3 ahead.

Step 2: Determine the Pay Frequency

The second step is to determine the Pay Frequency of your Paycheck; it is how often the employees are paid. Some of the standard Pay Frequencies are:

Pay Frequency Details
Weekly The employees are paid once a week.
Bi-Weekly The employees are paid once every two weeks.
Semi-Monthly The employees are paid twice a month. Usually on the 15th and 30th day of the month.
Monthly The employees are paid once every month. Mostly at the start or end of the month.
Quarterly (Discouraged by Alabama State) The employees are paid after every three months.
Annually (Discouraged by Alabama State) The employees are paid once a year.

Alaska State Laws for Pay Frequencies:

Like all other states, Alaska State also has labor law regulations that oblige the employer to pay the employees regularly on scheduled payday. Moreover, it also requires the employers to pay their hourly employees on regular payday at least, monthly, semi-monthly, bi-weekly, or weekly.

However, they are allowed for an initial employment contract to monthly pay periods if both employer and employee are agreed.

Alaska State also requires the employer to pay its employees, all the final dues within three days after termination.


Step 3: Determine the Gross Pay

The third step is to determine the Gross Pay of the employee based on the following criteria:

Hourly Employee:

  1. Basic Salary is calculated by multiplying Number of Hours worked in a pay frequency by Regular Hourly Rate.
  2. Overtime pay is calculated according to FLSA law, where every extra hour worked after 8 hours workday or 40-hours in a week, would be counted as Overtime hour that must be paid in time and half of regular hourly rate.
  3. Double Time Pay is a time that an employee is paid in double the regular hourly rate by the employee. It is paid if the employee works on federal holidays. However, their employers are not bound to pay it according to FLSA or Alaska State law.
  4. Now, to deduce the Gross Pay, we need to add Overtime Pay, Double Time Pay, Bonuses, Commissions, fringe benefits, Vacations Pay, Sick Pay, and Holiday Pay (If Any) into Basic Salary.

Note: We provide multiple calculators to calculate Total Hours Worked and Overtime that you can use to calculate your Paycheck. They are as follow:

Salaried Employee:

  1. To determine the gross salary for the employee, start with the annual salary and divide it by the number of pay periods to get a basic salary. For example, if the employee’s annual salary is $36500, and is paid once a month, then you must divide 36500/12. Therefore, the employee's basic salary is $3042.
  2. Now, add (if any) reimbursements, commissions, bonuses, *fringe benefits, or tips to the basic salary of the employee.
  3. Next, you need to add overtime pay into basic salary, only if the salaried employee has a salary equal to or below $455 a week or $23,660 annually. The FLSA regulates this, and the employee must be paid overtime at the rate of time and half of the hourly rate.
  4. Last, subtract any unpaid time off(s) from the basic salary to get Gross Pay.

Fringe Benefits:

Fringe benefits are the benefits offered by employers to employees who meet specific criteria set by the company. These benefits are often taxable and can affect the employee's paycheck.

The Fringe benefits are often deducted from employee’s Paycheck by Specific Dollar Amount or Percentage of the Gross Pay.

Some of the common Fringe Benefits are:

  • Health Insurances, including Medical, Dental, and Vision.
  • Individual HSA or Family HSA.
  • Housing, Company Car, and/or Cell Phone.
  • Gym and Fitness.
  • Student Loan Repayment.

Alaska State Laws for Gross Pay:

  • According to Alaska State Law for minimum wage, the employers in Alaska must pay a minimum wage of $9.89 (Effective from 2019) an hour to their employees.
  • Alaska Labor law requires the employers to grant 30 minutes of a lunch break to the employees, having ages 14-17 if they work five or more consecutive hours. Employees above 18 years of age don't require any lunch break unless, if the employer is willing to do so, he/she can provide it for 20 minutes or less and un-paid.
  • Alaska law for overtime prohibits the employer for calculating overtime pay using fluctuating-workweek method (also known as half-time for overtime or Chinese Overtime)
  • Employers having less than four employees are exempt from the overtime law.
  • There are no guidelines found in FLSA and Alaska State law that limits the total number of hours an employee can work as overtime.
  • According to the Family and Medical Leave Act (FMLA), Employers with at least 50 employees must grant 12-weeks of unpaid time-offs per year to the eligible employee for caregiving or illness.
  • Alaska Law doesn't bound the employer to pay vacation pay, premium pay for working on holidays (double time), sick leave, or paid holidays. However, the employer can offer these benefits (if they will) on specific terms and conditions.
  • Alaska State defines the workweek of a total of 168 hours, which is equal to 7 days.
  • Employers in Alaska are required to pay for Waiting Time and On-call Time to employees.

Step 4: Determine the Filing Status:

Here starts the complicated part. After the Gross Pay for the employee is deduced, the next thing an employer has to do is to refer the W-4 tax form.  This form is filled by the employee while joining the job.

Note:

  • The employee has to update his Form W4 if any significant changes come to his/her life. Such considerable changes include marriage, divorce, or child-baby.
  • The employee also has the authority to make a change in his/her form W4, an unlimited number of times, but only once per paycheck.

The form W4 contains all the essential details, including income tax details, marital status, and the number of allowances to be claimed. These details are required to calculate the Taxable Income, Federal Taxes, Allowances, State Taxes, and Local Taxes, that the employer has to withhold from the employee's salary.

Note: As IRS has made changes in the Tax Form W4, which would be effective from January 2020. Therefore, all the following steps are according to the new form.

There is a total of four filing statuses, from which the employee has to choose one. These are as follow:

  • Single
  • Married filing separately
  • Married filing jointly
  • Head of Household

Note: You can select "Single" as Marital Status on the Alaska Paycheck Calculator if the employee is "Single" or "Married filing separately." Else Choose "Married" if the employee is "Married Filing Jointly" or "Head of Household."

Step 5: Calculating the Taxable Income:

Taxable income is the income, which is used to determine the amount of taxes that should be withheld from the employee’s paycheck by the employer. It is different from Gross Pay.

There is the portion of income that is exempted from the taxes, such as cash gifts, inheritances, rebates, Welfare income, child support, State and local tax refunds, Life insurance, etc. This portion can be determined and claimed by the taxpayer (employee) by using "itemized deductions."

As the "itemized deductions" process is too long, the Taxpayer can also go for "standard deductions (a specific amount defined by the government to be deducted from Gross Pay according to taxpayer’s filing status" instead, for calculating the Taxable Income.

Standard Deduction amount for 2018 to 2025 is as follow:

Filing Status Standard Deduction Amount
Single $12,000
Married Filing Separately $12,000
Married Filing Jointly $18,000
Head of Household $24,000
Qualifying Widow(er)s $24,000


To determine the Taxable income, the taxpayer (employee) has to:

  • Subtract any "Standard deductions" or "Itemized deductions" deductions from the Gross Pay.
  • Subtract any "tax exemptions" such as "dependent exemption"

Note: This is just a general overview of Taxable Income. Many other factors need to be considered for Taxable income determination. Moreover, the criteria can be different from person to person. You must refer to your Lawyer, or study Taxable income in detail for calculating the accurate Taxable Income.


Step 6: Subtracting the Pre-Tax Contributions from Taxable Income:

As of now, the taxable income of an employee is deduced. The next step is to subtract any pre-tax contributions that were chosen by the employee. These contributions are designed to encourage employees to save for their retirement. Additionally, it further reduces the amount of taxable income, hence, increasing the take-home amount of an employee.

However, not all contributions are exempted from all taxes, but only from federal income tax. Therefore, some employees may have to pay FICA, state, or other taxes on such contributions.

Following are some of the common contributions that an employee can choose:


  1. Traditional 401(k) or 403(b) or other qualified retirement plans
  2. traditional IRA - Individual Retirement Accounts
  3. Solo 401(k), SEP-IRA or SIMPLE IRA
  4. healthcare savings account (HSA)
  5. Dental Insurance
  6. Vision Insurance
  7. Commuter Benefits including commuter parking, commuter transit and/or commuter benefits
  8. Health Insurance
  9. Dependent care FSA contributions

Step 7: Deducing the Number of Federal Allowances:

Before jumping on to Federal Taxes, it is essential to conclude the number of Allowances that an employee needs to claim.

Allowances are exemptions from paying a certain amount of income tax. Therefore, the amount of withholding tax that an employer withholds from the employee’s paycheck is inversely proportional to the number of allowances claimed.

General Number of Allowances a Taxpayer (Employee) must Claim
Situation Number of Allowances to claim
The taxpayer depends on someone 0 to 1 Allowance
Single – One Job – Taxpayer doesn't depend on anyone 1 to 2 Allowances
Married Couple with no dependents 2
Head of Household with one dependent 3
A married couple with one dependent 3
A married couple with two dependent 4

Effects of Allowances on Federal Taxes

The employee in form W4 already fills details of claimed allowances. The employee must do a complete working before filling out the details for the number of allowances he/she needs to claim as claiming extra Allowances may cause underpayment of taxes that results in a penalty by the IRS. On the other hand, claiming fewer Allowances is like lending money to IRS without any benefit.


Effects of Allowances on Federal Taxes
Situation Effects on Federal Withholding Taxes Consequences
To many Allowances claimed · Withholding Federal Tax decreases
· Take-Home Pay Increases
· The taxpayer may owe money to IRS
· Tax Payer has to pay the pending tax amount along with penalties
Too few Allowances claimed · Withholding Tax Federal increases
· Take-Home Pay decreases
· IRS may owe money to the taxpayer, for which
· Tax Payer is likely to receive a refund
· Tax Payer may have less money to spend the whole year until the refund is received

Details on how many allowances an employee must claim are provided here.

Step 8:  Subtracting the Federal Taxes

Once the final taxable income is calculated after subtracting all deductions (standard or itemized) and contributions, a certain amount is withheld by the employer from an employee's paycheck as federal income tax along with the two federal (FICA) programs: Social Security and Medicare.


Federal Income Taxes

This Federal Income Tax rate is applied at a gradual level, ranging from 0% to 37% of taxable earnings. The Tax rate depends on the filing status, number of Allowances claimed, and taxable income.

Therefore higher the income, the higher the federal tax rate, and the higher the number of Allowances claimed, the higher the Net Pay (Take-home Pay).

These rates are as follow:

Single Filers
Taxable Income Rate
$0 - $9,525 10.0%
$9,525 - $38,700 12.0%
$38,700 - $82,500 22.0%
$82,500 - $157,500 24.0%
$157,500 - $200,000 32.0%
$200,000 - $500,000 35.0%
$500,000+ 37.0%

Married, Filing Jointly
Taxable Income Rate
$0 - $19,050 10.0%
$19,050 - $77,400 12.0%
$77,400 - $165,000 22.0%
$165,000 - $315,000 24.0%
$315,000 - $400,000 32.0%
$400,000 - $600,000 35.0%
$600,000+ 37.0%

Married, Filing Separately
Taxable Income Rate
$0 - $9,525 10.0%
$9,525 - $38,700 12.0%
$38,700 - $82,500 22.0%
$82,500 - $157,500 24.0%
$157,500 - $200,000 32.0%
$200,000 - $500,000 35.0%
$500,000+ 37.0%

Head of Household
Taxable Income Rate
$0 - $13,600 10.0%
$13,600 - $51,800 12.0%
$51,800 - $82,500 22.0%
$82,500 - $157,500 24.0%
$157,500 - $200,000 32.0%
$200,000 - $500,000 35.0%
$500,000+ 37.0%

FICA Taxes (Social Security and Medicare):

In addition to the Federal Income Tax, Employers are also abided to withhold an amount from the employee’s paycheck for FICA Tax (Federal Insurance Contributions Act). These taxes are used to help American citizens with retirement, disability, survivorship, and medical treatment.

FICA Tax comprises of:

  1. Social Security Tax

A total of 12.4% of FICA tax is paid for Social Security, by both employee and employer. Here 6.2% is paid by the employee and remain 6.2% is funded by the employer. However, the Social Security tax is only applicable to the first $132,900 (in 2019) earned. No amount is charged above this earning,

  1. Medicare Tax

1.45 percent each is paid to Medicare by both employee and employer. Moreover, if the taxpayer (employee or employer) earns more than $200,000 as a single filer or $250,000 as a married couple than additional Medicare taxes of 0.9% are to be paid.

Note: If you are calculating your federal taxes as an employer, you have to add FUTA unemployment taxes in addition to FICA taxes, which is 6% of the first $7,000 of each employee’s taxable income.


Some points related to Federal Withholdings Taxes for Alaska State:

  • The employee is exempted from paying federal tax if, in the previous tax year, he/she has received a refund of all federal income tax withheld from his/her paycheck because he/she had zero tax liability.
  • The employee is exempted from paying federal tax if, in the current year, he/she is expecting to receive a refund of all federal income tax withheld because he/she expects to have zero tax liability again. If the employee thinks that he/she qualifies for this exemption (for example, because his/her income is quite low), he/she can indicate this on his/her W-4 Form.
  • The employee is exempted from paying social security tax who are nonpermanent, temporary, or substitutes.

Step 9: Subtracting State Taxes:

As we have discussed above, the Alaska State doesn’t charge any State Income Tax or Local Tax on the individuals. Therefore, you don’t need to subtract any State and Local Taxes from the Paycheck.

However, unlike the other States of America, where Un-employment Tax is paid only by the employers, Alaska State abides the employers to withhold a share from employee's salary too, as Employment Security Tax. Rates for 2019 for Employment Security Tax for Employer and a percentage of the employee are follow:


Year Wage Base (Annual) Standard Rate Employee Rate Employee Total
2019 $39,900 1.78% 1.78% $199.50


You can get updates on Employment Security Tax, on the official website for Alaska Labor HERE

Good News:

Surprisingly, Alaska State pays it's adult and children residents from Alaska Permanent Fund, who are living in Alaska for a whole Calendar year and intending to live here further. To avail such incentives, the resident must apply for the Permanent Fund Dividend (PFD).


Step 10: Subtracting the Post-Tax Deductions and Contributions

Although employers are not abided to withhold any post-tax deductions and contributions from employee’s paycheck. However, the employee can voluntary choose some post-tax contributions and benefits.

If an employee has opted some, then its employer's duty to account them into the employee's paycheck.

Some of the common Post-Tax Contributions are:

  • Retirement funds like Roth 401(k).
  • Wage Garnishments; It is an amount that may also be withheld by the employer from the employee's paycheck if the employee is subjected to any court-ordered garnishments.
  • Contributions to 529 college savings plans, Union dues or charitable donations.
  • PERS - Voluntary Contributions

Note:

For most small businesses and communities, Federal Income Tax, FICA taxes like Social Security & Medicare, and Employment Security Tax are the only withholdings from employee paychecks.

However, additional deductions may be required if your community participates in health, retirement insurance, or other benefit programs.

Therefore, assuming there are no other deductions and contributions, complete the paycheck for each employee based on the steps mentioned above.

Step 11: Calculating Paycheck

Once you have calculated all the details, as discussed above, then it's time to enter all your details into our Alaska Paycheck Calculator and deduce the "Net Pay"  amount instantly.

FAQs

Answer: There is no state income tax or local income tax in Alaska. However, Employee and Employers are subjected to Federal Income Tax that range between 0% to 37%, depending on several factors including filing status, number of allowances claimed and taxable income.

Answer: According to FLSA law, full time is considered as 40 Hours per Week. However, it's slightly lower in Alaska at 37.50 Hours per week. Moreover, for Health Insurance and Retirement benefits purposes, 30 hours is considered full time.

Answer: According to Alaska State Law, the employer should pay its employees either on the semi-monthly or monthly pay period.

Answer: No, Alaskans doesn't need to pay state or local taxes as an individual. However, they are abided to pay federal fees as well as sales taxes on the local level ranging from 1% to 7%.

Answer: The minimum wage in Alaska is raised to $9.89, from 2019, which is $2.5 higher than the federal minimum wage. However, there is an exception for the Fairbanks town in Alaska, having a slightly lower minimum wage of $9.80

Answer: The average salary of an employee working in Alaska is $13.73 per hour that sums up to approx. $28,000 annually for 40 hours workweek.

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