What is Alaska’s franchise tax?

Alaska doesn't have a franchise tax. What makes Alaska special is what you don't pay. No statewide personal income tax. No state sales tax. No franchise or "privilege" tax that bills you just for existing. This tax-light environment attracts businesses seeking to retain more of their earnings.

So, how does Alaska fund itself? Primarily through corporate income tax, a graduated system maxing out at 9.4% on taxable income. Unlike franchise taxes that charge you regardless of profit, Alaska only taxes you when you're actually making money.

The calculation begins with your federal taxable income, adds Alaska-specific tweaks, and then applies bracketed rates. If your business isn't structured as a corporation, you might owe nothing at the state level.

Additional state taxes

Alaska's tax picture extends beyond corporate income tax. The state has no statewide sales tax, but other taxes and filings can catch you off guard if you're not watching the calendar.

Local sales tax obligations:

• No state rate: Alaska charges 0% statewide sales tax
• Municipal variations: Boroughs and cities charge 1% to 7% local sales taxes
• Destination-based rules: Every in-state sale requires tracking specific municipality requirements
• Separate registrations: Must register with each municipality and file separate local returns

Excise tax requirements:

• Regulated goods: Alaska taxes tobacco, fuel, and alcohol per unit sold
• Independent obligation: Applies regardless of corporate income tax liability
• Unit-based calculation: Charged per item rather than percentage of sales

Employment-related taxes:

• Employment Security Tax: Unemployment insurance through the Department of Labor
• Registration required: Must register before hiring the first employee
• Quarterly reporting: Wage reports and combined employer/employee contributions are due quarterly

Every entity registered with the Department of Commerce must file an initial report within six months and a $100 biennial report every two years to maintain good standing. Failing to complete these simple filings can lead to administrative dissolution, even if your tax accounts are in order.

Discern automates your Alaska tax compliance and beyond

Alaska's corporate income tax calculations, quarterly estimates, and municipal sales tax requirements require professional tax expertise, especially when coordinating 30-day filing windows after federal deadlines and managing excise taxes on specific goods. 

While Discern can't help you with these complex tax filings, we can automate your Alaska biennial report deadlines, manage your registered agent requirements, and handle Department of Commerce compliance across all states where you operate. Our platform prevents administrative dissolution risks associated with missed Department of Commerce deadlines, allowing you to focus on business growth rather than compliance tracking.