BUSINESS TAX STRUCTURE

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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