Budget & Taxes (Income Tax)

This bill proposes to remove the state income tax on pass-through entities, which are businesses where income is passed directly to owners rather than being taxed at the corporate level. The change would take effect on January 1, 2028, by repealing the specific section of the tax code that currently imposes this tax. Directly affected individuals and businesses would no longer pay state income tax on their earnings from these types of enterprises. The legislation does not alter how other forms of income are taxed or change the tax rates for corporations.

SB 96 expands existing Alaska tax credits (including income, property, oil/gas producer, mining, and fisheries business credits) to allow businesses to claim credits for certain child care expenses related to their employees. Specifically, it adds three qualifying expenses: operating child care facilities for employees' children, contributing to nonprofit child care facilities for employees' children, and paying employees to offset their state child care costs. The bill also requires annual inflation adjustments to credit limits starting in 2030, tied to the Consumer Price Index for urban Alaska. This directly affects businesses in sectors covered by these tax credits, enabling them to reduce taxable income by claiming these new child care-related expenses. The bill was signed into law on June 24, 2025, with the changes effective for tax years beginning on or after January 1, 2030.

HB 152 establishes a new 4% education tax on income exceeding $150,000 for single filers or $300,000 for joint filers, applying to Alaska residents and nonresidents with income connected to the state. It also imposes a $150 annual tax on individuals with wages or self-employment income in Alaska. The bill repeals certain tax credits under Alaska’s existing income tax law. It directly affects individuals, S corporation shareholders, trusts, and estates with taxable income in Alaska, shifting tax burden toward higher earners to fund education. The tax takes effect upon enactment, with specific rules for nonresidents and trusts.

SB 1003 expands Alaska's tax credit system to allow businesses to claim credits for cash or equipment donations to tribal-operated public schools (via state compacts) and state-funded literacy programs. It modifies existing education tax credits - including those for insurance, oil/gas producers, property, mining, and fisheries businesses - to include these new donation categories. The bill sets a $10 million annual limit on total education tax credits per taxpayer (or $3 million for affiliated groups), preventing excessive credit claims across multiple programs. This directly affects businesses making qualifying donations to these specific educational initiatives in Alaska.

HB 1003 expands tax credits for businesses and individuals who donate to specific education programs in Alaska. It adds two new credit categories: contributions to public schools operated by tribal entities under state compacts, and donations to state-funded literacy programs run by the Department of Education. The bill also modifies existing education tax credits (including those for oil/gas, mining, and fishing businesses) by setting a $3 million annual limit per taxpayer for combined credits, preventing double-counting with other education-related credits. This policy directly affects taxpayers making qualifying donations to tribal schools, literacy initiatives, or state education programs.