Alaska State Taxes: Complete Guide

Alaska is one of nine states with no individual income tax and one of five with no state sales tax, making it a low-burden state for individual taxpayers. However, Alaskan businesses are not off the hook: the state imposes a corporate income tax with rates from 0% on the first $25,000 to 9.4% on income above $222,000. Many municipalities, including Juneau and Anchorage, levy local sales taxes ranging from 2% to 7.5%, so businesses selling goods or services in those areas must register and collect. Payroll taxes in Alaska are limited to unemployment insurance and workers compensation; there is no state withholding tax for individual employees. Back tax problems for Alaskans are exclusively federal IRS issues: residents with unfiled returns, self-employment income, or early retirement distributions from Permanent Fund Dividend accounts frequently owe more than expected. Fishing industry workers, oil field contractors, and remote service providers are at high risk for large IRS balances due to irregular income and infrequent quarterly estimated payments. The IRS Anchorage office handles Alaska cases; taxpayers can resolve back tax debt through IRS installment agreements, Currently Not Collectible status for hardship, or Offer in Compromise.