Alaska LLC Taxes

As both the largest and most northern state in the US, Alaska is home to several businesses, including limited liability companies (LLCs). But like all other states, Alaska has its own guidelines for how it handles taxes, which can be overwhelming for new business owners.

Regardless of the size of your business, if you operate an LLC in Alaska, you will need to ensure you stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you will need to pay for your Alaska LLC.

Recommended: Schedule a free consultation with an accountant to stay on top of your taxes. 

Alaska LLC Taxes Owed

LLCs benefit from pass-through taxation, meaning the business’s profits pass through to the members’ individual tax returns. This means that your business will not be paying taxes to the federal government, but instead you, as the LLC owner, must pay taxes on your portion of the income made from the LLC. 

In Alaska, LLC owners can expect to pay the following taxes:

Federal Taxes

Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.

Federal Self-Employment Taxes

It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%. 

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.

Alaska State Taxes

Each state has its own laws dictating how individuals and businesses are taxed. Alaska is one of the states that have no income tax, which is quite a benefit to starting and operating your LLC out of the state.

Alaska Income Taxes

As mentioned above, Alaska does not have state income taxes. This means you will not have to pay any taxes on your income to the state, only to the federal government. There are a total of seven states (including Alaska) that do not tax income at the state level.

Having a 0% income tax rate is quite a benefit when compared to other states, which on average, have a 5% income tax rate. While it may not be as popular as some of the warmer states, the money you save in taxes can be beneficial as it allows you can invest those tax savings directly back into your Alaska LLC.

Alaska Sales and Use Tax

In addition to lacking a state income tax, Alaska also does not have a state sales tax. This is rare, as most states utilize a standard sales tax for purchases. However, certain cities and counties (known as “boroughs”) may impose a sales tax if a vote passes through their local government. The maximum local sales tax rate for any location in Alaska is 7.5%. 

To see which areas utilize a sales tax and receive more information on the subject, visit the Department of Commerce, Community, and Economic Development’s Alaska Sales Tax Information page.

Register as a Sales and Use Tax Dealer in Alaska

Sellers in some Alaska boroughs must register with the local government and collect the tax.

Visit the Alaska Remote Seller Sales Tax Commission website for more information.

Additional State Taxes

Alaska’s Department of Revenue oversees the collection of various taxes that businesses may have to pay depending on their location, industry, and number of employees. 

Below are a few of the taxes your LLC may need to pay in Alaska:

  • Alcoholic Beverage Tax
  • Mining License Tax
  • Tire Fees
  • Fisheries Related Taxes
  • Tobacco Tax

To see the full list of tax types and learn more about them, visit the Alaska Department of Revenue’s Tax Types page.

Alaska Local Taxes

Local laws and ordinances between cities in Alaska may vary greatly from each other. Regardless of where you live in Alaska, we recommend you check with your local jurisdiction to ensure your business receives the proper local permits for operation and follows any local regulations that may affect your business in the future.

Alaska LLC Compliance

To operate your LLC in Alaska, you must adhere to local and state laws to remain in good standing. While Alaska LLCs do not file their taxes with the state, they must still file a report every two years with the State of Alaska as well as renew their business license either annually or biennially.

Additionally, LLCs must file an initial report within 180 days of forming their business.

Alaska LLC Biennial Report

All Alaska LLCs must file a biennial report every two years with the state. The primary purpose of this report is to keep your LLC’s contact information up to date in case the state needs to reach out to you. Even if nothing changes in the two years, you must still file this by January 2 two years from when you last filed.

An easy way to know when to file is to pay on January 2 of the next odd or even year from when you originally filed. For example, if you filed on June 26, 2023, the next time you would need to file is January 2, 2025. From then on, you can always just be sure to file in two years but before January 2.

Filing your biennial report will cost you $100 and can be done either online, by mail, or by fax. 

For more information, visit our Alaska LLC Biennial Report guide.

Alaska LLC Business License

All businesses in Alaska must obtain a state business license to operate legally — even if they don’t have a physical presence in the state.

You can choose to renew your license annually or biennially. The filing fee is $50 for one year and $100 for two years. See our Alaska Business License guide to learn more.

LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure that you handle your business taxes correctly.