Not all sales taxes are created equal

You may be surprised to learn that the sales tax you pay at the checkout counter largely depends on where you do your shopping. Residents in Houston, Wasilla, and Palmer all pay different rates. And now, a big change could come that would affect nearly everyone in the valley. Here is what you need to know.

First, Alaska has no statewide sales tax. That means every community sets its own rules. While there is a discussion in Juneau right now, it doesn't seem to be catching much traction. The Mat-Su Borough itself does not currently collect a general sales tax. Instead, the three cities within the borough (Houston, Wasilla, and Palmer) each run their own tax programs. If you shop outside those city limits, you currently pay no local sales tax at all – unless you purchase online. I'll explain that later.

The City of Houston charges a 2% sales tax on all sales, services, and rentals within city limits. The city only collects that tax on the first $500 of any single purchase, meaning you would never pay more than $10 on one transaction. So if you buy a $600 snowmobile part in Houston, you only pay tax on the first $500 of that price. On top of this is an additional 2% sales tax specifically for fireworks, which is directed toward public safety in the city.

Head down the highway to Wasilla and the rate goes up a little. The City of Wasilla collects a 2.5% sales tax on all sales, services, and rentals within city limits, with the tax capped at the first $500 of any transaction, meaning the most you pay in tax on a single purchase is $12.50.

Palmer has the highest city sales tax in the valley right now. The City of Palmer charges a 3% sales tax on all sales, services, and rentals. There, the tax applies to the first $1,000 of any purchase, creating a maximum tax of $30 per transaction. That higher cap means Palmer shoppers can end up paying more on big-ticket items compared to shoppers in Houston or Wasilla.

Now, here is where things get interesting for the Mat-Su. A new proposal is working its way through the Mat-Su Borough Assembly that would change how the borough pays for services. The Mat-Su Borough Assembly is considering a ballot measure that would ask voters to replace most of the borough's areawide property tax with a new 6.5% borough-wide sales tax. This would be the first such sales tax in Borough history.

The proposed 6.5% rate would be on top of whatever rate a city already charges. For example, Palmer currently has a 3% tax, so shoppers in those cities would pay both. That would be 9.5% sales tax. A Wasilla shopper could look at a combined rate of 9% on purchases if the borough tax passes.

Supporters say the idea is to spread the cost of borough services beyond just property owners and to capture tax revenue from visitors, online shoppers, and others who use Mat-Su roads and services but do not pay property taxes here.

If the Assembly approves putting it on the ballot, Mat-Su voters would decide the measure in the November 2026 general election. The Assembly plans to discuss the proposal at a public hearing on May 19. That meeting is your chance to show up and have your voice heard.

And on the topic of online shoppers, it is a little-known fact that people purchasing items on sites like Amazon and eBay, and almost any other retail website, pay sales tax. The tax they pay is based on their address. A resident in Houston who orders a gift through Etsy and has it delivered to their Big Lake post office would not pay the Houston sales tax, but a Big Lake resident who purchases and has it mailed to their Wasilla physical address will pay the Wasilla City tax regardless of where they actually live. Same thing for a Butte resident ordering to their Palmer PO Box.

As a side note, a question often comes up regarding SNAP (food stamp) purchases. SNAP purchases are exempt from all state and local sales taxes by federal law. If a business charged you tax on SNAP-eligible items, they have violated federal regulations. You should return to the store for a refund and report the retailer to your state's SNAP office. Businesses can face consequences if they violate the law.

Christian M. Hartley is a 40-year Alaskan resident with over 25 years of public safety experience and public service. He runs a freelance business, Big Lake Writer, from home in Big Lake that he shares with his wife of 19 years and their three teenage sons.