Ultimate Guide to Alaska Sales Tax

Home to 17 beautiful mountains with the tallest peaks, Alaska is a breathtaking place to visit. In Alaska, you can also climb to the top and conquer the business market when equipped with the right knowledge. The first step is learning how sales tax in Alaska works.

This guide breaks down everything you need to know about Alaska, one of the five states without sales tax. By the end of this comprehensive guide, you’ll understand Alaska’s unique tax regulations with confidence and ease.

Is There Sales Tax in Alaska?

Alaska has no statewide sales tax. However, Alaska allows its local municipalities to levy a sales tax. There are at least 107 jurisdictions that have different rates and rules regarding the imposition of the said tariff.

This brings the question: Why is there no statewide sales tax in Alaska?

The Last Frontier generates sufficient income from multiple sources, enough to relieve the need for a sales tax. Alaska’s main source of revenue is its thriving oil and gas industry, covering over 85% of the state’s finances.

Thanks to its earnings from the oil industry, Alaska developed a notable system called the Permanent Fund Dividend (PFD). This system provides Alaskans a direct economic advantage through its annual dividend returns, effectively balancing the lack of statewide sales tax.

The tourism industry is another huge contributor to Alaska’s finances. Without a statewide sales tax, Alaska ends up attracting more tourists. This strategy creates more income and other opportunities for the state’s economy.

Additionally, Alaska also relies on the following industries:

Fishing
Timber
Mining
Agriculture

It’s also believed that the Last Frontier has strong values regarding freedom and limited governance. With this nature, it’s no surprise for Alaskans to have a flexible, multifaceted system when it comes to their taxes.

Alaska Local Sales Tax

Alaska has about 107 municipalities that levy a local sales tax with rates ranging from 1.00% to 7.00%. Since every city has its distinctive rules, doing business in Alaska means facing a variety of sales and use tax regulations.

After all, the taxability of specific goods and services changes depending on the local jurisdiction. Here’s an example of 2 localities with differing sales tax rates:

Juneau City and Borough, AK – sales of all goods, services, and non-residential rentals are subject to a 5.00% sales tax. An additional 3.00% sales tax is levied on sales of alcoholic beverages and 9.00% on sales of room rentals with less than 30 days of duration.
Sitka City, AK – the sales tax in Sitka changes twice a year. Sales of all goods and services are subject to a 5.00% sales tax from October 1st to March 31st. This rate increases to 6.00% from April 1st to September 30th. Additional taxes may also be applied to sales of alcoholic beverages, tobacco, fish boxes, and room rentals.

To accurately determine the taxability of certain goods and services, Alaska advises businesses to contact the local municipalities for better guidance.

Alternatively, you may also access the Alaska Taxable to view an annual publication documenting all cities and the specific types of taxes they impose. However, this table only provides general information and may not contain every detail your business may need.

Please be advised that failure to comply with each city’s rules may result in different penalties as well. To simplify your transactions in Alaska, avoid all the intricacies by letting experts at TaxHero take care of the legal procedures.

Beyond Alaska Sales Tax: Other Taxes You Should Know

Aside from the local sales and use tax, there are other taxes in Alaska that every business owner should know.

While the list seems overwhelming at first glance, rest assured that only a few of these taxes may potentially impact your business.

To guarantee you find the specific details your business might need, let’s discuss the most relevant tax types below.

Alcoholic Beverage Tax

Alaska is no different from many states when it comes to taxing alcoholic beverages.

The rates for Alaska’s Alcoholic Beverage Tax vary depending on the type and amount of beverage that is sold. Here are the summarized tax rates:

Wine – $2.50
Liquor – $12.80
Beer by Small Breweries – $0.35
Beer (Malt Beverages) – $1.07 per gallon

Filing this tax must be done monthly, while returns are due by the last day of the month following the month of sale or transaction.

Commercial Passenger Vessel (CPV) Excise Tax

Effective since December 17, 2006, a $34.50 tax is imposed on every passenger for each voyage. This tariff should be collected by the person or corporation providing the traveling service through commercial vessels.

Exemption: Only applies to passengers onboarding commercial vessels not anchoring or mooring in state marine waters with intent to allow disembarking passengers.

The collected tax is due on the last day of the month following the month of sales. Filing and remitting the Commercial Passenger Vessel Excise Tax should be done monthly.

Corporate Income Tax

Any business in Alaska is bound to deal with the state’s Corporate Income Tax. Enterprises with a total taxable income worth $222,000 or more are subject to a 9.40% corporate income tax.

Here are more details to keep you prepared.

Returns are due 30 days after the federal due date.
Due dates cannot be extended. You must pay your corporate income tax on or before the 15th of the 4th month after the tax year closes.
Amount due $100,000 to $150,000 or beyond must be paid online, through Alaska’s Revenue Online website, or by a wire transfer.

Fisheries Related Tax

The fishing industry is one of the top sources of revenue in Alaska; hence why the Last Frontier has various taxes related to fishing.

Fisheries Business Tax – also known as “raw fish tax.” Applies to all processed fish in Alaska or unprocessed exported fish from Alaska. Rates vary between 1% to 5%. Fishermen who process the fish on board their ships and sell to licensed processors are exempt.
Salmon Enhancement Tax
Fishery Resource Landing Tax – Alaska imposes a 3% tax on established fisheries and a 1% tax on developing fisheries.
Seafood Marketing Assessment Tax – The rate is 0.5% of the assessed value of seafood processed first in Alaska or exported from Alaska. Fishermen or processors producing less than $50,000 value of seafood are exempt from this tax.
Regional Seafood Development Tax – A 1% tax is imposed on fish caught using drift or set gillnets that are sold in or exported from seafood regions (i.e, Prince William Sound and Bristol Bay).
Dive Fishery Management Assessment – A 1% tax is levied on sea urchins and sea cucumbers. Meanwhile, a 7% tax is imposed on geoducks.

Large Passenger Vessel Gambling Tax

Businesses providing gaming or gambling services on large passenger vessels sailing within the territorial waters of Alaska are subject to the Large Passenger Vessel Gambling Tax (LPV).

The rate is 33% on the adjusted estimated revenue generated by gaming or gambling activities inside a ship in Alaska.

Other Resources Tax

Aside from taxing its fishing industry, Alaska also has other resources that are subject to tax.

Mining License Tax – Businesses engaged in the mining industry in Alaska must pay the mining license tax. The tax is based on the business’s income, with rates ranging between 3% to 7%.
Motor Fuel Tax – Varying tax rates are imposed on motor fuels. Gasoline used for heating by federal, state, or local government agencies, foreign flights, exports, or charities is exempt from local sales and use tax.
Oil and Gas Production Tax – Alaska’s biggest source of revenue is its oil resources. Producing oil results in a 35% tax based on the value. On January 1, 2022, the rate for produced gas is 13% of the estimated value at the point of production.

Tobacco & Marijuana Tax

Since November 4, 2024, Alaska began taxing the production, sale, and use of marijuana within the state. Licensed marijuana cultivators or facilities must pay the following rates:

$50 per ounce of marijuana
$25 per ounce of immature or abnormal buds
$15 per ounce of trimmed marijuana flower buds and
$1 per clone of marijuana flower buds

As for tobacco, Alaska charges 75% of the wholesale price of tobacco products. This also applies to tobaccos imported within the state.

Tire Fees

Each sale of new tires made to be used on highways and sold in Alaska is subject to a $2.50 tire tax. An additional $5 fee is applied for tires with heavy studs (weighing more than 1.1 grams each).

Tire fee taxes must be filed quarterly and are due 30 days following the filing period. Tire sellers are allowed to keep at least 5% of the amount collected, with a maximum limit of $600 per quarter.

Exemptions: Sales to the government (federal, state, or local) for official use are exempt from tire fees. Sales to resellers with resale certificates can also exempt the buyer from tire fees.

Vehicle Rental Tax

Businesses engaged in leasing or vehicle rental services are subject to a 10% vehicle rental tax in Alaska. For recreational vehicle rentals, the rate is 3%. This applies if the lease or rental period doesn’t last longer than 90 consecutive days.

Exemptions apply to the following:

Taxicab rentals by taxicab drivers
Leases or rentals that exceed 90 consecutive days
Trucks rented by individuals moving their personal property
Lease or rentals used by government (federal, state, or local) agencies or employees
Vehicles provided by automobile dealers as a means of replacement transportation during a buyer’s warranty, recall, or service repairs

Utility Taxes

Some utility services are also subject to various taxes in Alaska.

Electric Cooperative Tax – Applies to qualified electric cooperatives recognized under AS 10.25. The rate is $0.00025 per kilowatt hour for furnished electric energy and power to consumers lasting less than 5 years. For energy that lasts beyond 5 years, the rate is $0.0005 per kilowatt hour.
Recovery Cost Charges – Alaska imposes regulatory cost charges on actively maintained utilities. The rates may vary depending on the city. For a complete list of all tax rates available in Alaska, visit the Alaska Regulatory Commission.
Telephone Cooperative Tax – Qualified telephone cooperatives under AS 10.25 are subject to a 1% tax. This applies to furnished telephone services lasting less than 5 years. For furnished telephone services lasting longer than 5 years, the rate is 2%.

Alaska and Remote Sellers

Being the only NOMAD state with local sales taxes, Alaska is fully prepared for remote seller activities within the state. The Alaska Remote Seller Sales Tax Commission (ARSSTC) was established specifically to guide remote sellers.

Through the ARSSTC, the “Remote Sellers Sales Tax Code” was created. This uniform code declares the rules that every out-of-state seller must comply with, effectively clearing the sales tax collection process in Alaska.

So, how can a remote seller identify whether they are liable to collect sales tax in Alaska? And what if you are a remote seller in Alaska who’s doing business in other states that have a sales tax?

The main defining factor is whether you have a sales tax nexus in a state or not.

Sales Tax Nexus

Establishing a sales tax nexus in a state means that you’re actively engaged in business in that state. Sales tax nexus has 2 principal types:

Physical nexus or
Economic nexus

When a business creates one of these nexus, it is required to collect sales tax in most states, including Alaska.

Physical Nexus

A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax.

In Alaska, the factors that determine a physical nexus are highly similar to many other states. But to be specific, here are the qualifications you must meet:

Physical Location: Having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business in a state.
Inventory in the State: This covers situations where you store your products within a state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
Employees, independent contractors, agents, or other representatives operating within a state on your behalf.
Business Operations: Includes farming and fishing operations in the state of Alaska.
Owning any leased or mobile property and intangible property (e.g., patents, copyrights, trademarks, franchises, stocks, bonds, notes, and bank deposits) can also create a nexus.

Economic Nexus

States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.

Generally, this law does not apply to states without sales tax, but Alaska is a unique case. With only local sales taxes, municipalities in Alaska still follow the standard practices of economic nexus regulations:

Beginning April 1, 2020, the threshold for economic nexus in Alaska is $100,000 in gross revenue in the previous or current calendar year’s sales or the prior 12 months.

While the nexus criteria mentioned above typically apply to most businesses, additional methods may exist for establishing a sales tax nexus.

Business Compliance Obligations in Alaska

Though Alaska has no general sales tax permit, Alaska still requires sellers to register for a business license once they have a sales tax nexus in the state.

You can apply for an Alaska business license at the Alaska Department of Commerce website. Depending on the type of business you own, the registration steps may vary. Ensure you have specific information on hand, including, but not limited to:

Business Identification Information (name, address, phone number, email address)
Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
Federal Employer Identification Number (EIN or FEIN)
Owner/Partner/Officer Information
IndustryActivity Details (description of products or services sold, sales volume, date of the first sale, or the expected date to start date)
Alaska Professional License, other required Alaska licenses, and permits
Alaska Registered Agent for Business Entities
Alaska NAICS Code

Registration Fee
There is a $50 annual fee to register for a Business License in Alaska.

Senior and Disabled Veteran Discount: Senior citizens and disabled veterans who are sole owners of their businesses only need to pay $25 for a Business License in Alaska.

Renewal

In Alaska, you have to renew your Business License annually. All business licenses expire on the last day of the year, regardless of the date the license was issued.

For instance, Business licenses issued on March 1, 2025, will expire on December 31, 2025, of the same year. Exceptions only apply to licenses issued after October 1st. Any Business License issued after October will only expire in the following year.

Other Licenses in Alaska

There are also other licenses you might need to keep your business running smoothly in Alaska, such as:

Alcoholic Beverage License
Tobacco Products License

Since the varying application process can be complicated, it’s best to consider the help of tax compliance experts. At TaxHero, we can process the license registrations so you can sit back and focus on growing your business.

Conclusion

Despite having no statewide sales tax, understanding relevant tax obligations in Alaska is always crucial to keep your business running smoothly. Remote sellers from Alaska could also face the burden of handling sales tax responsibilities in other states. Failure to comply may lead to penalties that could harm your business.

To ensure your business stays tax compliant even in a no-sales-tax state, you can make things easier by consulting tax professionals like TaxHero. Schedule a call with our CEO, who will personally walk you through the intricacies of sales tax compliance in every state.

The Ultimate Business Guide to Sales Tax in Alaska