Is It Expensive to Live in Anchorage, Alaska?

The cost of living in Anchorage, Alaska, generally exceeds the national average. Factors like its geographic location, climate, and reliance on external supply chains contribute to elevated prices for many goods and services. Understanding these dynamics is helpful for anyone considering Anchorage as a place to live, as they influence budgeting for common expenditures.

Anchorage’s Cost of Living at a Glance

Anchorage consistently ranks among the more expensive cities in the United States, with its overall cost of living typically 21% to 26% higher than the national average. This means that for every $100 spent in an average U.S. city, an Anchorage resident might spend approximately $121 to $126 for the same goods and services. While some categories of expenses are notably higher, others might be comparable or even lower than the national benchmark.

Breaking Down Key Expenses

Housing expenses are generally 33% higher than the U.S. average. Average monthly rent for an apartment ranges from $1,311 to $1,510.

A studio apartment costs around $1,103 per month.
A one-bedroom unit averages $1,214 to $1,320.
A two-bedroom apartment rents for $1,550 to $1,659 monthly.

The median home price in Anchorage falls within a range of $333,300 to $421,438.

Utility costs in Anchorage are typically 12% to 13% more. Electricity prices average around 25 to 26 cents per kilowatt-hour, approximately 49% higher than the national average. Natural gas prices in Anchorage were about 24% less than the national average in April 2025. Overall monthly utility bills can range from $250 to $350. Internet services often cost around $125 per month.

Groceries and food expenses are typically 26% to 27% higher than the national average. Transportation costs are also higher, about 14% more than the national average. Gas prices in Anchorage generally range from $3.68 to $4.30 per gallon. Car insurance in Anchorage averages $150 to $177 per month for full coverage.

Healthcare costs in Anchorage are 47% to 82% above the national average. This can impact both insurance premiums and out-of-pocket expenses for medical services.

Taxation and Earning Potential

Alaska is notable for its favorable tax environment, as it does not impose a state income tax on individuals. There is no statewide sales tax in Alaska. While some local municipalities may levy sales taxes, Anchorage does not have a general sales tax. Property taxes, however, are a local consideration and can be substantial in Anchorage. The median effective property tax rate in Anchorage is approximately 1.70%, which is higher than the national median of 1.02%. This translates to an average annual property tax bill of around $5,627 for homeowners. Property tax rates in the municipality typically range from 1.31% to 1.41% of the assessed value. Exemptions for senior citizens and disabled veterans are available, which can reduce the taxable value of a property.

The earning potential in Anchorage can help offset higher living costs. The average hourly wage in Anchorage was $35.55 in May 2024, exceeding the nationwide average of $32.66. This translates to an average annual pay of approximately $71,011. Alaska’s average weekly wage ranks among the top states nationally.

Unique Influences on Alaskan Prices

Anchorage’s geographic isolation plays a significant role in its elevated cost of living. Being far removed from major manufacturing and distribution centers in the contiguous United States means that most goods must be transported long distances, often by air or sea. This extensive transportation process incurs considerable shipping costs, which are then passed on to consumers through higher retail prices for everything from groceries to consumer goods. The limited supply chains and smaller market size also contribute to reduced competition among businesses, which can further inflate prices.

The challenging climate also influences costs, particularly for utilities and specialized needs. Long, cold winters necessitate higher energy consumption for heating, increasing utility bills for residents. Furthermore, the climate can require specialized housing construction and vehicle maintenance, adding to overall expenses.