Alaska Business Taxes (2026): No Income or Sales Tax, Corporate Rates and Fees

Alaska is one of the cheapest states in the country for owner-operated businesses. There is no personal income tax and no statewide sales tax, so profit from an LLC, sole proprietorship, partnership or S corporation is taxed only at the federal level. The exception is the C corporation: Alaska taxes corporate profit on a graduated scale that tops out at 9.4%, one of the higher top rates in the country.

That split means entity choice matters more in Alaska than in most states. This guide covers each tax, the fees for forming and keeping a business, and how Alaska compares with other low-tax states.

Corporate income tax

Alaska's corporate tax applies to C corporations only. It uses ten brackets:

Because the first $25,000 is exempt and the lower brackets are modest, a small corporation earning $100,000 pays only about $2,500 in Alaska corporate tax. Larger corporations quickly approach the 9.4% top rate.

Other points to know:

• Apportionment: Alaska follows the Multistate Tax Compact's three-factor formula (property, payroll and sales) for most corporations. Oil and gas companies use a special formula.
• Water's-edge combined reporting: Unitary groups file a combined report, with special rules for foreign affiliates.
• Oil and gas: Producers also pay a production tax, a petroleum property tax and royalties. These dominate state revenue and do not affect most small businesses.
• Returns: Form 6000 is due one month after the federal return due date for most corporations.

No personal income tax

Alaska repealed its personal income tax in 1980. Residents instead receive an annual Permanent Fund Dividend paid from oil wealth. For business owners this means:

• Sole proprietors and single-member LLCs pay no state tax on profit.
• Partnerships and multi-member LLCs have no state income tax filing.
• S corporations are not subject to the corporate income tax because Alaska follows the federal S election.
• Employees have no state withholding, which simplifies payroll.

The only state-level payroll tax is unemployment insurance. Alaska is unusual in that employees also contribute a small percentage of wages to unemployment insurance, which employers withhold alongside the employer contribution. The taxable wage base is one of the highest in the country and is indexed each year.

Sales tax: local only

Alaska has no statewide sales tax, but local governments can levy their own. More than 100 municipalities and boroughs do, at rates that range from about 1% to 7.5%. Juneau charges 5%, Kodiak 7% and many smaller communities somewhere between 2% and 6%. Anchorage, the largest city, has no general sales tax.

The average combined rate across the state is about 1.82%, the lowest of any state with a sales tax.

For remote sellers, the Alaska Remote Seller Sales Tax Commission (ARSSTC) coordinates collection for participating local jurisdictions. Out-of-state sellers above the Commission's threshold of $100,000 in annual sales to Alaska register once and file a single return instead of dealing with each town separately.

Other Alaska business taxes

• Business license: Nearly every business operating in Alaska needs a state business license, which costs $50 per year (or $100 for two years). Some professions need additional endorsements.
• Local property tax: Boroughs and cities tax real property, and some tax business personal property such as equipment and inventory. Anchorage and the Fairbanks North Star Borough are among the bigger property tax jurisdictions.
• Bed and alcohol taxes: Many towns add hotel, alcohol and tobacco taxes on top of the general sales tax.
• Fisheries and mining taxes: Fisheries business tax and mining license tax apply to those industries.

Forming a business in Alaska: fees and ongoing costs

The $250 formation fee is higher than in many states, but the low ongoing costs make Alaska inexpensive to maintain over time.

Worked example: $500,000 of profit

Here is a simplified comparison for a business earning $500,000 of taxable profit, all from Alaska.

A single LLC owner earning $150,000 or $75,000 pays $0 in Alaska income tax. Federal income tax and self-employment tax still apply. Because pass-through income escapes state tax entirely while corporate profit faces up to 9.4%, most Alaska small businesses stay as LLCs or elect S corporation status rather than operating as C corporations.

Choosing an entity in Alaska

Because the state taxes C corporations but not individuals, the usual entity comparison tilts strongly toward pass-through structures:

• Single-member LLC: No state income tax and only $100 every two years in report fees. The owner pays federal income tax and 15.3% self-employment tax.
• LLC taxed as an S corporation: Still no Alaska income tax, and the owner can cut self-employment tax by splitting profit between a reasonable salary and distributions. This is often the best fit once profit passes about $80,000.
• C corporation: Pays up to 9.4% in Alaska plus 21% federally. It makes sense mainly for companies raising venture capital, planning to use the Section 1202 QSBS exclusion, or retaining large profits to reinvest.

A C corporation earning $100,000 would pay about $2,500 to Alaska, while the same profit earned through an LLC pays nothing to the state. On $500,000 the gap grows to almost $37,000 a year.

Recent changes for 2025 and 2026

• Corporate rates unchanged: The ten-bracket schedule and 9.4% top rate apply in 2026.
• Proposals to tax pass-through entities and introduce a sales or income tax have been debated repeatedly in the legislature as oil revenues fluctuate. None has been enacted for 2026, but they remain a live political issue.
• Remote seller rules: More local jurisdictions have joined the ARSSTC, so remote sellers should check the current member list each year.

Is Alaska a good state for business?

Advantages

• No personal income tax, so pass-through owners pay no state tax on profit
• No statewide sales tax and very low average local rates
• Low formation and annual maintenance costs
• Permanent Fund Dividend for resident owners and employees

Drawbacks

• High 9.4% top corporate rate for C corporations
• Very high costs for labor, shipping, energy and real estate
• Small, dispersed markets and long supply chains
• Local sales taxes vary widely and require separate compliance in non-Commission towns

Alaska works best for owner-operated businesses that serve local markets or rely on resources like fishing, tourism or energy. Venture-backed startups that must be C corporations will find the corporate rate less attractive than in Wyoming or South Dakota, which have no corporate income tax at all.

Compliance checklist

1. File Articles of Organization or Incorporation with the Division of Corporations, Business and Professional Licensing.
2. Obtain an Alaska business license and any required professional endorsements.
3. Register with the Department of Labor for unemployment insurance if you hire.
4. Register for local sales tax in each municipality where you sell, or through the ARSSTC for remote sales.
5. C corporations file Form 6000 each year and make estimated payments.
6. File the biennial report with the state by January 2 of each filing year.

Alaska is not comparable with its land neighbors, so the table below compares it with other western states. You can also model federal tax with the United States calculator or read our LLC tax guide.