With a 26-14 vote in the House, the Alaska Legislature approved the first new major revenue source in years on Wednesday.
The measure, Senate Bill 113, would overhaul the state’s corporate tax system to apply to profits from businesses selling goods and services in Alaska, rather than just those physically based in the state. The move aims to capture revenue from Outside online companies and is expected to generate between $25 million and $65 million annually.
Legislators already have plans for some of that money. The public education bill that passed last month contains about $22 million in reading grants and $10 million in career and technical education funding that only becomes effective if Senate Bill 113 is enacted. The remaining funds would be used to address the state’s multi-million-dollar deficit.
Both measures await action by Gov. Mike Dunleavy, who has been uncharacteristically muted about his position on both bills but has previously opposed any new taxes.
While the measure faced the usual opposition from far-right Republicans, it passed both chambers with bipartisan support amid broad agreement that the state’s financial picture is untenable. Before passing the House 26-14, it passed the Senate 16-4. It’s a notable moment for legislators who have struggled for years to close the state’s budget, but, outside of the admittedly big deal of tapping into the Alaska Permanent Fund to pay for government, have found little success.
The reality of the structural deficit came crashing down on legislators this year, as accelerating uncertainty with the Trump administration dashed hopes that they could deliver a much-needed boost to public school funding. Ultimately, legislators approved a scaled-back education funding bill as calls for revenue gained renewed traction.
But while larger revenue measures like increased oil taxes or broad-based taxes on Alaskans, such as an income or sales tax, are still a long way from even being seriously entertained in Juneau, backers of Senate Bill 113 say it’s a rare tax bill that won’t cost Alaskans or Alaskan businesses. That’s because the taxes are, by and large, already collected by other states but would be diverted to Alaska under the tax structure.
It could also be a boon for Alaska-based companies that conduct most of their business outside the state, as they would no longer be required to pay Alaska taxes on those profits.
“It’s about as close as you can get to a unicorn bill to raise money for the state of Alaska,” said Sen. Bill Wielechwoski, D-Anchorage, at a news conference last month, according to the Alaska Beacon. “It’s a bill that doesn’t raise taxes on Alaskans, doesn’t raise taxes on Alaskan businesses. It’s not going to cost any more simply by changing the structure of our corporate income tax. It will probably, quite frankly, shift money from other states to the state of Alaska, and so it’ll be a unicorn. It’s kind of a rarity. There’s probably not too many of these out there.”
Rep. Will Stapp, the Fairbanks Republican who carried the bill on the House floor on Wednesday, said it should be seen as the first step to updating the state’s tax code.
“The purpose of the bill is to really start making steps towards restructuring the way Alaska looks at its corporate net income tax and modernizing it so it’s in line with other states,” he said. “I think that this bill will be the first in probably many bills.”
The vote
The bill passed the Senate on a 16-4 vote on April 15. The yes votes included Sens. Bjorkman, Claman, Cronk, Dunbar, Giessel, Gray-Jackson, Hoffman, Kawasaki, Kiehl, Merrick, Olson, Stedman, Stevens, Tobin, Wielechowski and Yundt. The no votes were Sens. Hughes, Kaufman, Myers and Shower.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Bluesky.
