Alaska perennially has the lowest tax burden of any state in the nation, nearly 60 percent below the national average. With no personal income tax, unless your business is a traditional corporation (a C corporation), generally neither your business’s income nor its net worth will be subject to state taxation. This is also true for certain small corporations and partnerships without a corporate partner. It is strongly recommended that a professional tax advisor, accountant, and/or attorney be consulted before starting a business.

Corporate Income Tax

For corporations doing business only in the state, Alaska levies a corporate income tax on Alaska taxable income which is based on federal taxable income with certain Alaska adjustments.

Multistate corporations apportion income on a water’s edge basis using the standard apportionment formula of property, payroll and sales. Oil and gas corporations use a modified apportionment formula applied to worldwide income.

Tax rates are graduated from 0% to 9.4% in increments of either $24,000 or $25,000 of Alaska taxable income. The 0% rate applies to taxable income of $25,000 and below, while the 9.4% rate applies to taxable income of $222,000 and over.

There are a number of federal and Alaska-specific tax credits that can be used to offset your tax burden, depending on industry.

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