The Alaska income tax proposal currently moving through the Legislature is HB 152, the “Education Tax,” which passed the House State Affairs Committee in March 2026 on a 4-2 vote and is now in the House Finance Committee.1Alaska State Legislature. HB 152 – Bill History and Action Its rate structure has not been finalized in committee, but it follows the framework of HB 156 from the prior legislative session: a 2% tax on individual taxable income above $200,000, with the Permanent Fund Dividend excluded from the taxable base. Nothing has passed yet, and if a bill is signed in 2026 the earliest returns would likely be filed in 2028.
What the Proposed Tax Would Cost You
HB 156 is the most detailed public blueprint for how an Alaska income tax would actually work, and every current proposal is built on its structure.2Alaska State Legislature. HB 156 – An Act Relating to the Taxation of Income of Individuals, Partners, Shareholders in S Corporations, Trusts, and Estates Under that framework:
- The rate is 2% on taxable income above $200,000.
- Your taxable income starts with your federal adjusted gross income, then subtracts a standard deduction and the full amount of any PFD you received.
- A flat $20 assessment applies to anyone with wages or self-employment income in Alaska, regardless of income level.
Because the PFD and the standard deduction both come off the top, the real threshold before the percentage tax kicks in sits well above $200,000 for most households. A married couple filing jointly who both received PFDs and took the standard deduction would need combined income well above $400,000 before owing anything beyond the $20.
Pass-through business income works the way most states handle it. If you own an interest in an S-corporation or partnership, the entity itself does not pay the tax; your share of the income flows onto your personal return and is taxed there.
How the Permanent Fund Dividend Would Be Treated
The PFD is excluded from Alaska taxable income under the HB 156 framework. The state would not tax the dividend itself, and for most Alaskans whose income falls below the taxable threshold, the dividend would not be touched at all.
For higher earners who actually owe the state tax, HB 156 included an optional mechanism: you could direct the Department of Revenue to withhold part or all of your PFD and apply it toward your state income tax bill, rather than writing a separate check.
Federal treatment of the PFD does not change. The IRS still treats the entire payment as income, including any energy relief portion, and you report it on Schedule 1 of your federal return.3Internal Revenue Service. Clarification About Alaska Permanent Fund Dividends Failing to report it can trigger a negligence penalty.4Alaska Department of Revenue. Permanent Fund Dividend – Tax Information The 2024 PFD was $1,702,5Department of Revenue. Department of Revenue Announces 2024 Permanent Fund Dividend Amount and Energy Relief and the 2025 PFD dropped to $1,000.6Department of Revenue. Department of Revenue Announces 2025 Permanent Fund Dividend Amount
If You Earn Income in Another State
HB 156 included a credit for taxes paid to other states. If you worked part of the year in a state that already taxed your wages there, your Alaska liability would be reduced by the amount of tax you paid elsewhere on that out-of-state income. The point is to prevent the same dollars from being taxed twice.
Separate Bills Aimed at Businesses
Two other bills are often grouped under the “Alaska income tax” heading, but they target businesses rather than individuals.
SB 92 would impose a 9.4% tax on qualified taxable income above $5 million for sole proprietorships, partnerships, and S-corporations that produce or transport oil and gas in Alaska.7Alaska State Legislature. SB 92 – An Act Establishing an Income Tax on Certain Entities Producing or Transporting Oil or Gas It closes a gap in current law: oil and gas companies structured as pass-throughs escape the existing C-corporation tax because their income flows to individual owners, and Alaska has no individual income tax to catch it. C-corporations already paying under existing law are exempt. The bill lets the Department of Revenue aggregate income across related entities if it finds income was split to stay under the $5 million threshold. The Department of Revenue has classified the fiscal impact as indeterminate.8Alaska State Legislature. SB 92 – Bill History and Action
SB 113 would have shifted Alaska to market-based sourcing for corporate income (assigning income to the state where the customer sits rather than where the company has offices) and added provisions aimed at highly digitized businesses. Legislative testimony pegged the combined revenue at $25 million to $65 million annually.9BillTrack50. Alaska Senate Bill 113 Governor Dunleavy vetoed SB 113 on September 29, 2025.10Alaska State Senate. Governor Vetoes Legislation That Would Fund Reading Incentive A companion bill, HB 280, has been introduced in the current session to revive the concept.
Alaska’s existing corporate income tax on C-corporations, with graduated rates reaching 9.4% on taxable income above $222,000, is already on the books and separate from all of this.11Justia Law. Alaska Statutes 43.20.011 – Tax on Corporations
Why This Is Back on the Table
Alaska is facing a budget shortfall approaching $500 million. The state has relied on oil revenue to fund government for decades, and when oil prices drop the budget bleeds. Drawing down savings, reducing PFD payouts, and delaying infrastructure spending have bridged recurring gaps without solving the underlying mismatch: expenses routinely exceed revenue when oil prices are soft. A broad-based income tax would give the state a revenue source that tracks economic activity rather than commodity prices. The volatility of the PFD itself (from $1,702 in 2024 to $1,000 in 2025) is part of what has pushed some legislators toward a tax instead of larger draws from the Permanent Fund.
When It Could Take Effect
Passage would not mean instant collection. The Department of Revenue would need to build collection infrastructure from scratch, integrate with the PFD payment system, coordinate with national tax software vendors, and hire staff. A realistic phase-in is at least 12 to 18 months after a bill is signed. For a bill signed in 2026, that puts the earliest filings in 2028.
Whether any version of an income tax can clear both chambers and survive a gubernatorial signature is still the open question. HB 152 is in House Finance, SB 92 remains active, and HB 280 is attempting to revive the SB 113 approach. None of this is law yet, and the rate, threshold, and PFD mechanics described above all come from the HB 156 blueprint and could change in committee before any bill reaches the floor.