In the same tax year, two city councils fifteen minutes apart moved the same kind of number in opposite directions. Fairbanks raised its property tax. North Pole cut its property tax in half. Neither move had anything to do with what homes are actually worth in either city, and neither move shows up on a listing sheet. If you are choosing between the two based on median price, you are comparing the wrong line item.
Here is the part that matters for anyone weighing North Pole against Fairbanks this year: the two cities fund themselves through almost opposite mechanisms. Fairbanks leans on property tax and charges zero sales tax. North Pole leans on sales tax and just gave its property tax a haircut. What you actually pay to own a home in each place depends less on the sticker price of the house and more on how the city chooses to collect its money, and that choice just changed in both places at once.
The two moves, side by side
The Fairbanks City Council voted 5-1 in June 2026 to raise the city's property tax rate to 6.381 mills, up from 5.833 mills in 2025. A few months earlier, in December 2025, the North Pole City Council adopted its 2026 budget with a city mill rate of 1.75, cutting the previously proposed 3.5 mills in half.
Both cities sit inside the Fairbanks North Star Borough, which layers its own areawide mill levy of 10.677 mills on top of whichever city rate applies. Stack those together and the total mill burden for 2026 looks like this:
| City mill rate | Borough mill rate | Total mills | City sales tax | |
|---|---|---|---|---|
| Fairbanks (city limits) | 6.381 | 10.677 | 17.058 | 0% |
| North Pole (city limits) | 1.75 | 10.677 | 12.427 | 5.5% |
On a $350,000 home, that gap between 17.058 and 12.427 mills works out to roughly $1,620 more per year in property tax inside Fairbanks city limits than inside North Pole city limits, using the 2026 rates alone. That is a real difference. It is also only half the story, because one of these cities collects almost nothing at the register and the other collects 5.5% on most retail purchases.
Why Fairbanks raised its rate
The Fairbanks increase was not driven by rising home values or new city services. It traces back to a legal settlement. The city paid $3.25 million in October 2025 as part of a settlement with Marvin Roberts, one of four men who reached settlements with the City of Fairbanks over a 2017 wrongful arrest and imprisonment case, and the city racked up nearly $7 million in claims and judgments from 2025 overall. Alaska law lets cities and boroughs recoup the prior year's settlements, lawsuits, and claims through the mill rate, separate from the cap that normally limits property and sales tax increases.
Without intervention, the mill rate would have climbed higher, somewhere between 7.2 and 7.5 mills depending on which of the two published accounts you use. Mayor Mindy O'Neall proposed spreading $4 million of that cost over five to ten years starting in 2028 instead of billing it all at once, which is why the actual 2026 number landed at 6.381 rather than higher. Council member John Ringstad cast the lone vote against the adopted rate. O'Neall's stated reasoning was to soften the blow for residents already dealing with rising power, heating fuel, and grocery costs.
The mechanism worth noting here is that this increase is a repayment schedule layered onto an ordinary budget, not a permanent recalibration of city services. Another settlement payment to Roberts is due in 2027, and as of this budget cycle the city had not yet decided whether to fold that into next year's mill rate, pull it from the general fund, or spread it further. A Fairbanks buyer closing this year should not assume 6.381 mills is a stable baseline. It is a number still being paid off.
Why North Pole cut its rate
North Pole's move ran in the opposite direction for a completely different reason. Council member David Brandt pushed to cut the proposed 3.5 mill rate down to 1.75, arguing the city was sitting on a larger unassigned general fund surplus than it needed and had consistently collected more revenue than it projected. The council's bet is that the city's online sales tax, which it has collected since April 2021 and which has grown every year since, can help backfill the property tax revenue the cut gives up. The adopted 2026 budget projects property tax revenue falling from $1.3 million to about $650,000, while online sales tax revenue is projected to climb by roughly $300,000 to $1.1 million.
Council member Santa Claus, weighing in on the cut, argued the lower city mill rate could pull more buyers inside North Pole's city limits rather than the surrounding borough, telling the council "that would increase our revenue ultimately, I believe." Mayor Larry Terch was less enthusiastic about the mechanics, pointing out that because the Fairbanks North Star Borough (not the city) actually bills and collects property tax for both jurisdictions, a mid-cycle rate change plays havoc with mortgage escrow accounts. He called it "essentially playing yo-yo with their house payment," warning that residents might see a refund now and a bigger bill later if the rate moves again. This is not the first time North Pole has swung its rate. The city ran 3.5 mills, cut to 1.499 in 2017, held around 2.499 through 2018 and 2019, then went back up to 3.5 in 2020 before this year's cut to 1.75.
The sales tax nobody in Fairbanks pays
Fairbanks, both the city and the surrounding borough, charges 0% general sales tax. North Pole charges 5.5% on regular retail sales, including online purchases delivered inside city limits, plus an 8% bed tax on short-term lodging that does not apply to apartment rentals.
There is a wrinkle in how that 5.5% actually lands, and it changes who feels it. North Pole caps the sales tax collected at $16.50 per sale. That cap kicks in once the taxable portion of a purchase crosses about $300, since 5.5% of $300 is $16.50. Below that threshold, you pay the full 5.5%. Above it, the tax stops growing. A grocery run or a few hundred dollars of everyday retail gets taxed at the full rate. A big-ticket purchase, a used truck, a full set of appliances, a living room set, effectively pays a much lower blended rate once it clears that $300 mark. The people who feel North Pole's sales tax most are the ones with steady, routine local spending, not the ones making one large purchase a year.
What this actually means for a buyer
None of this tells you which city is cheaper. It tells you that the answer depends on your household's spending pattern more than on the number printed on either city's budget page. A retired couple with modest day-to-day retail spending and a paid-off vehicle will feel North Pole's lower property tax bill and barely notice the sales tax. A young family doing frequent local shopping, with regular grocery and retail trips inside North Pole city limits, will give some of that property tax savings back at the register every month.
The other piece worth carrying into a purchase decision is that both of these numbers are recent political choices, not fixed facts about either city. Fairbanks is mid-way through paying off a settlement and has another payment due in 2027. North Pole just reversed course on its rate again, and its own mayor flagged that the current cut could unwind. If you are financing with an escrow account, ask your lender how a mill rate change mid-cycle gets reconciled, because Terch's warning about payments moving up and down is not hypothetical for North Pole owners this year.
FAQ
Does the Fairbanks North Star Borough itself charge sales tax? No. The borough's own rate is 0%. Only the city of North Pole layers a sales tax on top of the borough's property tax, and only inside its city limits.
Will these mill rates change again next year? Both are worth watching. Fairbanks has another settlement payment due in 2027, which could affect its next mill rate decision, and North Pole's council has adjusted its own city mill rate multiple times since 2017.
Property tax lines and sales tax lines tell two different stories about the same city, and this year those stories are moving in opposite directions in North Pole and Fairbanks at the same time. If you want to know what a specific address actually costs to carry, rather than what the city budget page says in the abstract, that's a conversation worth having before you write an offer. Joshua Leaders and the team can walk through the real numbers on a property you're considering and help you get a free home valuation if you're weighing a move of your own.
