Alaska Senate Bill SB113

Alaska 2025-2026 Regular Session

• Introduced: 2/26/25
• Refer: 2/26/25
• Report Pass: 4/9/25
• Refer: 4/9/25
• Engrossed: 4/15/25

Caption

Apportion Taxable Income;digital Business

Impact

The passage of SB113 is expected to have significant implications for the state's revenue collection methods, particularly in the context of businesses that primarily operate online. By aligning Alaska's tax policies with the guidelines outlined in the Multistate Tax Compact, the bill aims to create a more consistent and predictable framework for income apportionment which could be beneficial for taxpayer compliance. Additionally, the bill’s effective date is set for January 1, 2026, indicating that businesses will need time to adjust to these new regulations while also being mindful of an upcoming deadline for implementation.

Summary

Senate Bill 113 aims to modify the apportionment of taxable income for highly digitized businesses operating in Alaska. This legislation seeks to streamline the tax reporting process and ensure that revenues from such businesses are distributed accurately according to state law. One of the central provisions of the bill is that it defines a 'highly digitized business' as one where 50% or more of the sales in the state consist of digital goods or services delivered electronically, thereby establishing the criteria for tax obligations under the amended tax codes.

Contention

Notably, there have been discussions surrounding the bill regarding the potential burden it may impose on smaller businesses that operate within the state. Critics express concerns that this new system could complicate tax reporting and create additional compliance requirements that disproportionately affect smaller entities compared to larger corporations that have resources to navigate complex tax regulations. As such, the bill has sparked a conversation about ensuring that the tax framework is equitable and does not discourage startup or small-scale enterprises from thriving in Alaska’s economy.