An Act relating to the elimination of income taxes on pass-through entities.

34th Legislature (2025-2026)

HB 3002 would repeal income taxes on pass-through entities in Alaska, effective January 1, 2028.

(H) REFERRED TO FINANCE

#business #oil&gas #taxation

Summary of HB 3002 (34th Legislature, 3rd Special Session, Alaska)

Purpose and intent

HB 3002 seeks to eliminate income taxes on pass-through entities in Alaska.

The bill is titled: “An Act relating to the elimination of income taxes on pass-through entities.”

It is introduced by the House Rules Committee at the governor’s request and referred to the Finance Committee.

Key provisions

Repeal/Elimination: Section 1 provides that AS 43.20.019 will be repealed on January 1, 2028. AS 43.20.019 governs the corporate/individual income tax framework applicable to certain business entities and incomes.

Scope: The core policy change is to remove the income tax obligations specifically on pass-through entities. Pass-through entities typically include partnerships, S-corporations, LLCs taxed as partnerships, and other entities where income is passed through to owners to be taxed at individual rates rather than taxed at the entity level.

Transition Timeline: The repeal of the statute is scheduled to take effect on January 1, 2028, indicating a phased or delayed implementation to align with budgetary, administrative, or compliance planning needs.

Who would be affected

Pass-through entities operating in Alaska (e.g., partnerships, LLCs taxed as partnerships, and certain entities taxed similarly) would be affected.

Individual owners or members of these pass-through entities would, in turn, experience changes in their tax liability, since income would no longer be taxed at the entity level under the repealed statute—though individual taxes could still apply depending on other Alaska tax provisions and the broader tax code.

Procedural and timeline aspects

Status: Introduced June 20, 2026, and referred to the Finance Committee.

Action history notes a standard progression: first reading and committee referrals, with a note indicating in-determinable Revenue (FN1: INDETERMINATE(REV)).

Effective date for repeal: January 1, 2028.

As a fiscal/“finance” item, the bill would likely undergo budgetary impact analysis, revenue projections, and potential transitional rules if needed for businesses and the Department of Revenue.

Potential impacts and considerations

Revenue impact: Eliminating income taxes on pass-through entities could reduce state tax revenue beginning January 1, 2028, with effects on the state’s general fund and any programs funded by those revenues. The exact fiscal impact would depend on current tax collections, the share of revenue attributable to pass-through entity income, and any offsetting tax measures or behavioral changes.

Economic impact: Could affect business climate by lowering after-tax costs for pass-through entities, potentially influencing investment, formation, and hiring decisions within Alaska.

Administrative considerations: The Department of Revenue would need to adjust tax administration, forms, and compliance guidance to reflect the repeal and ensure a smooth transition for taxpayers and preparers.

Notes

The bill text provided is limited to the repeal of AS 43.20.019 and does not include details on any compensating measures, exemptions, or complementary tax adjustments that might accompany the repeal.

Additional information (e.g., fiscal notes, estimated revenue impact, and any sunset or contingency provisions) would be essential for a complete assessment and is not included in the excerpt.