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Senate Rules Committee Introduces Two Revenue Bills
Senate Bill 113 Will Modernize Corporate Income Tax Apportionment and Senate Bill 112 Reforms Per-Barrel Credits to Strengthen State Revenue
(Juneau, AK) – Today, the Senate Rules Committee introduced two pieces of legislation aiming to address the state’s revenue shortfalls while also not raising taxes on Alaskans. Senate Bill 113 seeks to modernize Alaska’s corporate income tax law to include online sales from outside corporations, just as if they were brick-and-mortar businesses. Senate Bill 112 reforms Alaska’s per-barrel oil tax credits to create a fairer and more sustainable tax structure for the state.
Alaska’s corporate income tax apportionment laws, last updated in 1970, do not sufficiently address online sales. The legislation modernizes the tax code by adopting market-based sourcing - a concept adopted by at least 36 other states - which taxes the business at the location of the customer, not the business, and applies a single sales factor to calculate the tax for highly digitized businesses doing business in Alaska. These updates ensure that online businesses benefiting from Alaska’s economy pay corporate income taxes, just like brick-and-mortar companies operating in the state.
“This legislation will not raise taxes for Alaskans or local businesses,” stated Senate Rules Chair Senator Bill Wielechowski, D-Anchorage. “It simply ensures that major out-of-state corporations benefiting from our economy contribute just as local businesses do. This establishes a level playing field for all entities operating in Alaska."
In 2022, the Department of Revenue estimated these reforms could generate between $25 and $65 million annually.
The other component reduces Alaska’s sliding-scale per-barrel oil production tax credits, which have led to billions of dollars in lost revenue for the state of Alaska. Under the current system, these credits provide major North Slope producers with tax discounts based on the price of oil, costing Alaska $8.9 billion in revenue through fiscal year 2025 alone.
The reform lowers the credit range from $8–$1 to $5–$1 per barrel. In 2013, when these credits were initially introduced in Senate Bill 21, that bill passed the Senate with the credits capped at $5. The credits were increased to $8 in the House and received no analysis in the Alaska State Senate. Senate Bill 112 also introduces an investment match requirement, ensuring that tax credits are only granted if they align with qualified capital expenditures. This encourages producers to reinvest in Alaska’s economy, supporting local jobs and industry growth.
"For years, the size of the per-barrel credit system has cost the state billions of dollars without delivering tangible benefits," said Sen. Wielechowski. "This simple change ensures that tax credits are granted with accountability and a clear return for Alaskans while continuing to support investment in our oil fields."
In 2021, the Department of Revenue testified to the Joint Fiscal Policy Working Group that cutting the oil tax credits from $8 to $5 would have minimal impact on oil company investment in Alaska. Independent legislative consultants also testified that cutting oil tax credits would have minimal impact on oil company investment in Alaska. The proposed revenue legislation represents fairness and a balanced approach to tackling Alaska’s fiscal challenges without increasing taxes on residents or local small businesses.
Senate Bill 112 was referred to the Resources Committee and Finance Committee. Senate Bill 113 was referred to the Finance Committee.
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