Bill > SB113

This bill updates Alaska's tax code to modify how businesses, particularly highly digitized businesses, apportion their income for state tax purposes. The bill amends the Multistate Tax Compact to replace references to "business income" with "apportionable income" and introduces a new section specifically addressing taxation of highly digitized businesses. Under the new provisions, a business is considered "highly digitized" if 50 percent or more of its sales in the state involve digital services, electronic transmissions, computer-related services, or Internet sales. For such businesses, the income apportionment will be based solely on the sales factor, which determines the proportion of a company's total sales that occur within Alaska. The bill defines electronic transmission broadly, including transmissions via wire, cable, satellite, and electronic signals, and covers digital goods like streaming music, videos, books, and software licenses. The new taxation approach for highly digitized businesses will apply to tax returns filed for tax years beginning on or after January 1, 2026, giving businesses time to prepare for the changes. The bill aims to update tax regulations to better account for modern digital business models and ensure appropriate taxation of businesses operating in the digital economy.

Budget and Finance

Rules (S)

https://www.akleg.gov/basis/Bill/Detail/34?Root=SB113