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Bill

SB 113

An Act relating to the Multistate Tax Compact; relating to apportionment of income to the state; relating to highly digitized businesses subject to the Alaska Net Income Tax Act; and providing for an effective date.

34th Legislature (2025-2026)

SB 113 adjusts income apportionment rules for digital businesses under Alaska's tax code, increasing state tax obligations despite governor's veto of the original measure.

(S) JOINT SESSION at 09:00 AM HOUSE CHAMBER
#business #corporations #internet #regulations #revenue #sales #science&technology #taxation
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Bill Summary · SB 113

Legislative bill overview

SB 113 modifies how Alaska apportions business income for tax purposes, particularly affecting highly digitized businesses under the state's Net Income Tax Act and the Multistate Tax Compact framework. The bill establishes new apportionment rules that would change which portion of digital company revenues are subject to Alaska taxation based on economic activity within the state.

Why this is important

Digital businesses operating across multiple states have used apportionment methods that significantly reduced their Alaska tax liability, potentially shifting tax burden to traditional in-state businesses. How states define and tax digital business income is a national policy debate affecting state revenue and competitive fairness between digital and traditional commerce sectors.

Potential points of contention

  • Revenue impact vs. business competitiveness: Stricter apportionment rules increase state tax revenue but may discourage digital companies from conducting business in Alaska or increase compliance costs
  • Multistate Tax Compact conformity: Changes to apportionment formulas can create inconsistencies with other states' approaches, potentially triggering double-taxation disputes
  • Definition of "highly digitized": The criteria for which businesses qualify could create classification disputes and unequal treatment of similar business models
  • Retroactive application: Implementation timing and whether rules apply to prior tax years affects affected businesses' liability exposure

Compiled from official sources — confirm details with the bill’s official record.

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