Alaska Salary Paycheck Calculator
Alaska may be known as The Last Frontier, but its geographic isolation doesn’t mean there aren’t payroll taxes and paycheck laws to follow. Thankfully, you don’t have to wander out into the payroll frontier alone. A full-service payroll provider or accountant can help you calculate and track the numbers. In the meantime, we’ve laid out the essential details you need to know.
Are there state payroll taxes in Alaska?
Yes, but only one. Alaska might be the #1 state in size, but it ranks low on the number of payroll taxes.
Alaska has no state income tax, joining Nevada, Texas, Florida, Wyoming, New Hampshire, Tennessee, South Dakota, and Washington in not taxing employee wages.
Alaska’s only state payroll tax is for unemployment insurance (UI), or Employment Security Tax. In 2022, both employers and employees pay UI tax on the first $45,200 of each employee’s wages. (Certain fishing operators are exempt from paying this UI tax.)
The employee rate is 0.56% and can change each year. The employer rate is unique to your business, though it too can change each year. Alaska’s Department of Labor and Workforce Development will send you a notice with your new employer rate before the start of each year.
What federal payroll taxes do I need to know about?
While Alaska may only have one state payroll tax, you’ll still need to consider federal payroll taxes like employers in all states. There’s FICA, FUTA, federal income tax, and the Additional Medicare tax. Don’t worry, we’ll break it down for you.
Two of the federal payroll taxes are paid solely by the employee. Those are federal income tax and the Additional Medicare Tax.
Federal Income Tax
Your employees should complete Form W-4 when they are hired so you can use the information on it to calculate the correct federal income tax withholding for them. The withholding amount will vary based on the employee’s wages, filing status, and other factors.
Additional Medicare tax
Employees may need to pay this 0.9% tax depending on their income and tax filing status.
As an employer, you must withhold this tax from any employee wages that exceed $200,000 each year.
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
Lastly, there is one federal payroll tax that’s paid exclusively by the employer. It’s the FUTA tax.
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.
Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
Is there anything else about Alaska paycheck laws that I should know
Yes! Here are a few important paycheck laws in Alaska you need to keep in mind.
- Federal salary threshold: The federal salary threshold is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
- New Hires: You need to report new employees to Alaska’s Child Support Services Division within 20 days of hire.
- Pay stubs: All employees must receive pay stubs for each pay period. Pay stubs must have:
- Beginning and ending dates of the pay period,
- Number of regular and overtime hours worked,
- Rate of pay,
- Gross wages,
- Deductions for taxes, and
- Other authorized deductions.
- On-call time: Some employees may have to be paid for time spent on-call. Check with the Alaska Department of Labor and Workforce Development for specifics.
- Final Paychecks: You must issue a departing employee’s final paycheck within three working days (excluding weekends and holidays) of their last day. The exception is if an employee leaves voluntarily. In that case, you can pay that employee on the next regularly scheduled pay date.
Fishing industry: The fishing industry has different payroll rules than those we’ve explained here. Check out the Alaska Department of Labor and Workforce Development FAQ to learn more.