Alaska Small Business Taxes: The Employer’s Complete 2023 Guide

Feli Oliveros

If you’re interested in starting a new business, Alaska—which is aptly nicknamed “The Last Frontier”—might be a great place to do so. According to the Tax Foundation, Alaska is the third most tax-friendly state in the United States because it doesn’t impose many of the taxes that businesses and individuals incur in other states. 

The Land of the Midnight Sun isn’t completely tax-free though, so read on. 

What kind of taxes do businesses have to pay in Alaska?

Alaska doesn’t levy an individual state income tax, state sales tax, franchise tax, business personal property tax, or withholding tax—making this state a great place for small businesses. The only taxes small business owners may be responsible for include the corporate income tax and the unemployment insurance tax, as well as any industry-related and local taxes. 

Alaska individual income tax

The state of Alaska doesn’t collect individual income taxes, so sole proprietorships as well as most partnerships and limited liability companies (LLCs) won’t have to pay taxes on their business income. 

However, certain business entities—such as LLCs and partnerships with business entities as a member or partner, or LLCs taxed as corporations—may need to file tax returns every year. 

Alaska corporate income tax

Alaska taxes corporations that are incorporated in or do business in the state. Some corporations, including S corporations and certain corporations with less than $50 million in assets, are exempt from paying the Alaska corporate income tax

In 2023, the corporate income tax rate ranges from 0% to 9.4%, based on the organization’s taxable income. 

How to pay corporate income tax and file your returns

Corporate tax returns (Form 6000) are due 30 days after your federal corporate tax returns are due, and can be submitted through the Alaska Revenue Online (ROL) platform.

Corporate income tax payments, on the other hand, must be paid by the 15th day of the fourth month after the end of the tax year. Corporations must also make quarterly estimated tax payments, which are due on April 15, June 15, September 15, and December 15. 

If your business expects to make an estimated tax payment of $100,000 or more, or if the payment you’re including with your return is $150,000 or more, you must submit payment online on ROL or via wire transfer. Those submitting estimated tax payments by mail must send payment to the following address along with payment voucher Form 6240:

Tax Division
Alaska Department of Revenue
P.O. Box 110420
Juneau, AK 99811-0420

If you have any questions about Alaska’s corporate income tax, read the instructions for Form 6000 or get in touch with the state’s Department of Revenue tax division.

Alaska unemployment insurance tax

Typically known as the unemployment insurance tax in other states, in Alaska it’s called the employment security tax. Alaska businesses with at least one employee must pay this employer tax to fund unemployment benefits for eligible workers who leave the company. 

The 2023 tax rate ranges from 1% to 5.4% on the first $47,100 of wages for established businesses. New employers can expect to pay between 1.31% and 1.86%, depending on their industry. 

How to pay employment security tax

Every quarter, employers must file contribution reports (Form TQ01) and make unemployment payments to the Alaska Department of Labor. These quarterly reports and payments are due on April 30, July 31, October 31, and January 31. Keep in mind that you’ll have to file reports even if you didn’t pay any wages for the quarter.

Some businesses are required to fulfill these requirements online, while others have the option to file online or by mail.

If you meet any of the following requirements, you must file and pay your employment security tax online: 

  • Have 50 or more employees in a quarter
  • Pay $1 million or more in taxable wages in the current or previous calendar year
  • Have a payroll agent report on behalf of your company 

The state of Alaska also encourages employers to file online, even if they don’t meet the above requirements. Alternatively, if you want to file by mail, send your reports and payments to:

Alaska Department of Labor and Workforce Development
Juneau Central Office
P.O. Box 115509
Juneau, AK 99811-5509

For more details on the Alaska employment security tax, read the state’s unemployment insurance tax handbook.

Other industry-related and local taxes

Businesses in certain industries may be required to pay taxes on the services they provide or on products like gas, alcohol, and tobacco. Additionally, some local governments collect their own taxes from businesses that operate in their jurisdictions. 

For instance, although Alaska doesn’t levy a statewide sales tax, some cities or municipalities choose to impose their own sales tax. With a maximum local sales tax rate of 7.5%, Alaska’s average combined state and local sales tax rate is 1.76%.

For more information on the specific state and local taxes your business is subject to, talk to your accountant or tax advisor. 

Alaska business tax breakdown by business type

If you have a business or plan on establishing one in Alaska, here’s what you can expect different types of businesses to pay in federal and state taxes. Keep in mind that pass-through entities don’t pay federal income taxes—owners pay taxes through their personal income tax returns instead. 

Business typeState income taxesUnemployment insurance taxFederal taxes
C corporationYes Yes, if you hire employeesYes 
S corporationNo Yes, if you hire employeesYes (pass-through
LLC with C corp electionYes Yes, if you hire employeesYes
LLCNoYes, if you hire employeesYes, (pass-through)
Partnership No Yes, if you hire employeesYes (pass-through
Sole proprietorshipNoYes, if you hire employeesYes, by way of individual income tax

File your Alaska small business taxes with Gusto 

Filing taxes as a first-time small business owner isn’t the easiest—but that’s why Gusto’s here to help. Use our HR software to run payroll, file taxes, and stay compliant with federal and state regulations without missing a beat. Sign up for Gusto today, or get in touch with a team member to learn more. 

Feli Oliveros Feli Oliveros is a freelance finance and business writer with experience covering personal and small business finance. In 2015 she graduated from UCLA, where she earned her bachelor’s degree in English and minored in Anthropology.
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