Alaska LLC Taxes

Ensuring your Alaska limited liability company (LLC) is meeting all its tax obligations requires a solid grasp of the various tax laws in place at local, state, and federal jurisdictions.

Our guide looks at the main Alaska LLC taxes for you to be aware of and provides a comprehensive walkthrough of the tax filing procedures for LLCs in the state. Let’s dive in.

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.

How is an LLC Taxed in Alaska?

Taxation in Alaska isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can also elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporation income tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay FICA or federal self-employment tax on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in Alaska to help you ensure your LLC navigates them effectively.

Alaska Local Taxes

The local laws and tax regulations differ greatly between different localities in Alaska, where there are currently a number of unique taxes in place at a local level.

Below is a list of main local taxes and permits for you to be aware of at the borough and city level.

Sales and Use Taxes

Sales tax is a group of Alaska taxes that are applied to the sale or use of goods and services. These taxes are generally calculated as a percentage of the price paid by the consumer and then collected by businesses at the point of sale in order to generate revenue for local governments.

Alaska is one of the five states that doesn’t have statewide sales and use taxes, though they are imposed at a local level by a number of municipalities at rates between 1% and 7% depending on the city or borough.

Note: You can find the exact sales and use tax rates in your municipality by using the Alaska Taxable Report.

Property Taxes

If your LLC owns real property in Alaska, it will need to pay taxes. However, like many other states, property tax is not imposed at a statewide level, and is instead set and managed by the local assessor in each borough. Out of Alaska’s 18 organized boroughs, property taxes are levied in 14 of them, including:

• Fairbanks North Star Borough
• Haines Borough
• Kenai Peninsula Borough

For more information on how property taxes work in your local area, you’ll need to get in contact with the assessor in your municipality.

Note: You can find the relevant contact information for the assessors in all the jurisdictions where property tax is levied on the Alaska Department of Commerce, Community, and Economic Development website.

Recommended Service: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant.

Alaska State Taxes

Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below, we’ve delved into the most relevant state-level taxes for LLCs in Alaska. 

Income Taxes

Alaska is one of the few states that doesn’t charge a personal income tax. This means that you won’t have to submit any returns for this tax with the state if your Alaska LLC is organized under the default tax status.

However, if your LLC is organized as a corporation, it will be subject to the Alaska corporate income tax, which ranges from 2% to 9.4% according to the following thresholds:

Note: For more information on how to file your state corporate income tax returns, as well as the forms you’ll need to do so, refer to the Corporate Income Tax page on the Alaska Department of Revenue’s website.

Business Privilege Taxes

Despite the lack of a general statewide requirement to collect sales tax in Alaska, there are a number of taxes imposed on businesses at a state level for the privilege of operating in certain specific industries, including:

• Cigarette and Tobacco Tax: Businesses importing cigarettes and tobacco products into Alaska must pay a tax rate set at $0.10 per cigarette (or $2.00 per pack) and 75% of the wholesale price for any other tobacco products. The first 400 cigarettes brought into the state for personal use are tax-exempt.
• Motor Fuel Tax: This tax applies to businesses that transfer, sell, or use motor fuel in the state at rates that vary by fuel type: $0.08 per gallon for diesel and gasoline for highway use, $0.05 for marine use, $0.047 for aviation gasoline, and $0.032 for jet fuel.
• Alcoholic Beverages Tax: Businesses manufacturing, selling, or bottling alcoholic beverages in the state are liable to pay this tax, though secondary liability is also placed on retailers and buyers. The rate of this tax varies between $0.35 to $2.50 per gallon, depending on the type of alcohol being sold.

There are more than 30 of these industry-specific business privilege taxes in Alaska. For the full list, as well as information on how each tax is applied, you’ll need to refer to The Alaska Tax Division's website.

Note: While each of these taxes has individual paper forms you can use to file your returns, it’s easier to submit them online using the Alaska Tax Division’s Revenue Online (ROL) platform.

Unemployment Insurance Tax

Any business in Alaska that hires at least one employee is required to pay a percentage of its employees’ wages to the state as unemployment insurance tax. This is only payable up to the taxable wage base, which in 2023 is $47,100, at rates that vary between 1% and 5.4%.

If your business has fewer than four quarters’ worth of wage history in the last 12 quarters, it may qualify to pay lower rates of this tax that vary between 1.99% and 2.44% up to the taxable wage base.

It’s worth noting that your business will also need to withhold 0.51% of the first $47,100 of each employee’s wages as their contribution towards Alaska’s unemployment insurance tax.

Note: In order to pay unemployment insurance tax, businesses can submit a paper application using Form TQ01, though it’s much easier to file your taxes online using a myAlaska account.

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below, we’ve explored some of the main types your LLC may be required to pay for federal tax purposes:

Income Tax

By default, the Internal Revenue Service (IRS) will not treat single and multi-member LLCs as separate entities from you and your partners for federal income tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income taxes on them at the personal rate of your tax bracket.

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S Corps — which change how these taxes are levied in different ways. 

Self-Employment Tax

In addition to income tax, members of single and multi-members LLCs will need to pay self-employment taxes on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employment Tax

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in Alaska

Below, we’ve outlined the general process an LLC in Alaska will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in. 

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return. 

Step 2: Find The Right Tax Forms

Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The filing deadline is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State Tax Returns: Your state taxes can be submitted online using the Revenue Online platform or myAlaska website (depending on the tax in question).
• Local Tax Returns: The filing requirements can vary depending on the specific tax, so be sure to contact the local governing agency in your locality for more information.

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form. 

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.  

Keep Your Alaska LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

Alaska Biennial Report

In Alaska, all businesses registered with the state are required to file a biennial report every two years with the Division of Corporations, Business & Professional Licensing. This ensures that the state’s records are regularly kept up to date with your business’s key details, such as:

• The names and addresses of key personnel
• Its registered agent’s information
• Contact information for official communication

Make sure to gather all this relevant information before you begin your online filing. Don’t worry if you can’t remember your Alaska Entity Number at the moment — you can do a search using your entity’s name on this platform in order to find it.

Note: The schedule for filing your Alaska Biennial Report is based on the year your business was initially registered. For example, if your business was registered in a year with an even number, you’ll be required to file this report every even-numbered year. 

Licensure and Tax Requirements

In Alaska, almost all businesses are required to obtain various business licenses and permits at the local, state, and federal levels. Below are three of the most common types your LLC may need:

• General Business License: Alaska requires a universal business license for all companies operating in the state, irrespective of their specific industry or function. This general business license is provided by the Alaska Department of Commerce, Community, and Economic Development (DCCED). 
• Professional Licenses: For certain specialized professions or business activities in Alaska, such as those in the medical, engineering, or architectural fields, a professional license from the Alaska Division of Corporations, Business and Professional Licensing will be necessary.
• Environmental Permits: Businesses in Alaska that are involved in construction or perform activities that can affect public health or have a potential environmental impact, will often need to obtain a specific permit from the Alaska Department of Environmental Conservation.

Note: For more information on the specific licenses and permits your LLC may need, see the Business Licensing page on the Department of Commerce, Community, and Economic Development website.

Alaska LLC Taxes FAQs