Alaska does not have a state sales and use tax, as it is against the state’s constitution. However, the constitution provides that certain municipalities can levy local sales taxes. The sales tax rates in municipalities vary from jurisdiction to jurisdiction. This guide does not fully describe all of Alaska’s tax laws and regulations. Businesses should contact a business attorney or visit the Alaska Department of Commerce, Community and Economic Development to learn more about the rules and regulations associated with their industries.
Types of taxes
Since Alaska does not collect sales and use taxes at the state level and leaves this to the municipalities, they have some “creative” taxing strategies, including various specialized business taxes. Some Alaska municipalities require business taxpayers to collect and remit sales tax, use tax and other taxes. Other taxes might include a bed tax or a tax on selling raw fish in addition to taxes on tangible personal property.
Retailers that sell cigarettes are subject to high taxes in some jurisdictions, and those taxes are normally passed on to the consumer. Some jurisdictions charge a millage rate per cigarette on top of a very high percentage for wholesale tobacco products.
Sales tax
Alaska does not charge a state sales tax, but municipalities can charge sales taxes, which is dependent upon the jurisdiction the business is located in. For example, Aniak and Buckland charge 2 percent, while Cold Bay and Denali Borough charge 6 percent. Sitka charges 7 percent.
Use tax
If a municipality charges a sales tax, it usually charges a use tax. The use tax must be the same as the sales tax and only applies to buyers. Thus, if a business purchases something for resale and ends up using it instead of selling it, the business must pay a use tax for that item.
The business does not pay both sales taxes and use taxes on an item. It pays one or the other. File the use tax return with the municipality, just as you would the sales tax return.
Bed tax
A bed tax is a tax that merchants must collect on hotels, motels, rooms, and other short-term rentals. The bed tax varies from municipality to municipality. Most charge a percentage, though some charge a fee. For example, Dillingham charges 4 percent, Adak charges 5 percent, Atqasuk charges 12 percent, and Ekwok charges $5 per person in the city.
If your business is a hotel, bed, and breakfast, or another establishment that rents rooms, be sure to check your municipality’s laws to determine how much. Even if you rent out a room in your home on occasion, you must pay this transient tax.
Raw fish tax
Merchants that sell raw fish must tax the fish in certain jurisdictions. The tax varies from jurisdiction to jurisdiction. For example, Akhiok charges 1.075 and Yakutat charges $10 per fish box. In most cases, the municipalities that have a raw fish tax are those that are along the coast and other rich fishing rivers, lakes, and ponds.
Fuel transfer
Municipalities can charge a fuel transfer tax on top of the state and federal excise taxes. For example, Utqiagvik charges 2 percent on top of the taxes that the state and federal governments charge. Delta Junction charges $0.04 per gallon.
The state and federal taxes are as follows:
Excise Tax | Other Tax | Total State Taxes | |
Alaska Gasoline Tax | 8 cents per gallon | 1 cent per gallon | 9 cents per gallon |
Alaska Diesel Tax | 8 cents per gallon | 1 cent per gallon | 9 cents per gallon |
Alaska Gasohol Tax | 8 cents per gallon | 1 cent per gallon | 9 cents per gallon |
Alaska Aviation Fuel Tax | 4.7 cents per gallon |
| 4.7 cents per gallon |
Alaska Jet Fuel Tax | 3.2 cents per gallon |
| 3.2 cents per gallon |
The fuel vendors pay the taxes, though the customer ends up paying the taxes since the vendor will include the taxes in the retail price of the fuel. Businesses must submit tax reports and remit payment of the taxes on the last day of the month. For example, for fuel sales you made in January 2022, you would pay the taxes on January 31, 2022.
Tobacco tax
Municipalities charge a tobacco tax that varies from jurisdiction to jurisdiction. The tax can vary within a jurisdiction. For example, Akhiok has a varying tobacco tax while Allakaket charges $2 per pack and 45 percent wholesale on other tobacco products. Some municipalities charge mills (millage), such as Angoon, which charges 50 mills per cigarette and 30 percent wholesale tax.
Car rental tax
Some municipalities charge a car rental tax instead of or in addition to the municipality’s sales tax.
Alcohol tax
A municipality can also charge an alcohol tax on top of sales taxes. For example, Atqasuk charges 12 percent while Wrangell charges 3 percent.
Marijuana tax
Those who can buy marijuana, may have to pay a tax, depending on the municipality they live in. Retailers must charge this tax on top of the sale price. For example, Chuathbaluk charges 5 percent while Dillingham charges $25 per ounce.
Flat rate motor vehicle tax
Some municipalities charge a flat rate motor vehicle tax. The amount can vary from municipality to municipality.
Utility tax
Municipalities may also charge a utility tax. For example, Anaktuvuk Pass charges 6 percent in the city only.
Professional guide fee
Some jurisdictions charge a “sales tax” on professional guides. The professional guide fee varies from municipality to municipality. For example, Buckland charges $3 per visitor per day in the borough and Edna Bay charges $3 per visitor per day.
Registering for Alaska's taxes
Since taxes are not collected at the state level, businesses must contact the municipality where they are located to register and remit taxes.
Alaska tax exemptions
Since the state does not collect sales and use tax, it does not have any exemptions. However, it will provide a letter for exemptions when a business requires it – usually when buying goods from out of state and the seller wants to charge sales tax and should not be.
If out-of-state sellers, including marketplace sellers, try to charge taxes that are more than the taxes your local government charges, you can print out and send the letter of exemption to them.
The state does not offer a resale certificate since it does not have exemptions, but the municipality might require a certificate for sales of tangible personal property. Check with your municipality for sales tax exemption information.
Calculating Alaska's sales and use tax rates
Since Alaska only taxes at the municipality level, charge the requisite tax for each item the business sells. For example, if a municipality charges 4 percent sales tax and the business sells an item for $10, the total sale, including the tax liability, would be $10.40.
Filing and paying Alaska's sales and use taxes
Contact the municipality to file tax returns and pay the various sales taxes and other taxes due. Since you do not pay taxes to a state department of revenue, the due dates vary depending on the municipality. Each municipality has its own tax forms and tax information. Where a business file will depend on the business location.
FAQs
Alaska does not have a state sales tax. Instead, municipalities can charge a sales tax and other taxes.
Retail sales are not taxed at the state level. The varying taxes imposed for each jurisdiction vary in percentage and type.
If the municipality you live in collects bed tax, then you must charge the tax if you rent out a room in your house, even for one night.
You do not pay taxes at the state level, but if the municipality where the business is located collects sales tax, then the buyer must pay sales or use tax unless it is reselling the items.
The state’s constitution does not allow the state to charge a sales tax. However, the constitution does give wide authority for municipalities to charge sales taxes and determine what is taxable.
You must contact the business location’s municipality to ask which items are not taxable.
