The state’s 2003 total gross state product was $31 billion. Its per-capita income for 2003 was $33,213, 14th in the nation. Alaska’s main export is seafood. Agriculture represents only a fraction of the Alaska economy. Agricultural production is primarily for consumption within the state and includes nursery stock, dairy products, vegetables, and livestock. Manufacturing is limited, with most foodstuffs and general goods imported from elsewhere.

Employment is primarily in government and industries such as natural resource extraction, shipping, and transportation. Military bases are a significant component of the economy in both Fairbanks and Anchorage. Its industrial outputs are crude petroleum, natural gas, coal, gold, precious metals, zinc and other mining, seafood processing, timber and wood products. There is also a growing service and tourism sector. Tourists have contributed to the economy by supporting local lodging.

Alaska’s economy is heavily dependent on increasingly expensive diesel fuel for heating, transportation, electric power and light. Though wind and hydroelectric power are abundant and underutilized, proposals for state-wide energy systems (e.g. with special low-cost electric interties) were judged uneconomic due to low (<$0.50/Gal) fuel prices, long distances and low population.

The cost of goods in Alaska has long been higher than in the contiguous 48 states. This has changed for the most part in Anchorage and Fairbanks, where the cost of living is actually less than some major cities in the Lower 48, thanks to lower housing and transportation costs.

The introduction of big-box stores in Anchorage, Fairbanks, and Juneau also did much to lower prices. However, rural Alaska suffers from extremely high prices for food and consumer goods, compared to the rest of the country due to the relatively limited transportation infrastructure. Many rural residents come in to these cities and purchase food and goods in bulk from warehouse clubs like Costco and Sam’s Club. Some have embraced the free shipping offers of some online retailers to purchase items much more cheaply than they could in their own communities, if they are available at all.

Alaska is one of only six states that do not collect state sales tax and one of seven states that do not levy an individual income tax. To finance state government operations, Alaska depends primarily on petroleum revenues. The Department of Revenue Tax Division reports regularly on the state’s revenue sources. The Department also issues an annual overview of its operations, including new state laws that directly affect the tax division.

While Alaska does not charge a state sales tax, 89 municipalities collect a local sales tax, with a range of between 1 percent and 7 percent. Typical sales tax rates are 3 to 5 percent. Other types of local taxes levied include raw fish taxes, hotel and motel “bed” taxes, severance taxes, liquor and tobacco taxes, gaming (pull tabs) taxes, tire taxes and fuel transfer taxes.

A percentage of revenue collected from certain state taxes and license fees (such as petroleum, aviation motor fuel, telephone cooperative) is shared with municipalities in Alaska. Property taxes are relatively low, with only 25 of 161 incorporated municipalities or boroughs in the state assessing property taxes.[citation needed] The average per capita property tax paid in all municipalities, excluding oil and gas properties, was US$999 (2003 data).