Bill > HB280

This bill amends Alaska's tax laws to update how income is apportioned, particularly for highly digitized businesses. It modifies the Multistate Tax Compact (AS 43.19), which provides a framework for states to agree on how to divide a business's income for tax purposes when that business operates in multiple states. The changes redefine "business income" to "apportionable income," which is a broader term that includes income from intangible property if its acquisition, management, or disposition is related to the taxpayer's trade or business. Crucially, the bill introduces a new section (AS 43.20.148) that specifically addresses "highly digitized businesses," defining them as businesses where at least 50% of their in-state sales involve intangible property or services delivered electronically, computer and internet-related services delivered in the state, or tangible personal property from Internet sales where the Internet is the primary customer access method. For these highly digitized businesses, their income will be apportioned based solely on the sales factor, simplifying the calculation. The bill also makes conforming changes to existing laws regarding water transportation carriers and oil and gas production/transportation, ensuring they also use the updated definition of "apportionable income." The new provisions for highly digitized businesses apply to tax years beginning on or after January 1, 2026, and the Act is retroactive to that date, taking effect immediately upon passage.

Budget and Finance

Rules (House)

https://www.akleg.gov/basis/Bill/Detail/34?Root=HB280