On January 26, 2026, SB 277 was introduced on behalf of Alaska’s Governor. This bill would, among other things, enact a temporary statewide sales and use tax on personal property and services. Currently, Alaska is one of five states (along with Delaware, Montana, New Hampshire, and Oregon) that do not impose a broad-based state sales tax (note that some Alaska localities currently impose a sales tax). If enacted, SB 277 will impose a sales tax and also change other Alaska tax provisions, including adopting the following changes to its corporate income tax: implementing market-based sourcing, expanding the scope of income apportionable to Alaska, and phasing out the corporate income tax by 2031.
State-level sales tax
The state-level regime proposed by SB 277 generally resembles most other states’ sales and use tax structures – with one very notable exception mentioned below. For example, SB 277 adopts a Wayfair economic nexus threshold: a remote seller would be required to register, collect, and remit the state sales tax if it has Alaska gross revenues from goods and services of more than $100,000 during the current or immediately preceding calendar year. Accordingly, a remote seller would calculate its proposed nexus threshold by including not only taxable retail sales sourced to Alaska, but also tax-exempt sales including resales and other non-taxable transactions. A marketplace facilitator that meets the $100,000 economic nexus threshold must also register, collect, and remit tax on taxable sales made through the marketplace.[1] However, a seller that makes sales “exclusively” through a registered marketplace facilitator is not required to register, collect, or remit the tax.
SB 277 imposes a highly unusual tax rate structure. Unlike all other states that impose a single, general tax rate, Alaska sales and use tax rates vary depending on the time of the year[2]:
- 4% from April 1 through September 30, and
- 2% from October 1 through March 31.
The tax rate would change to 0% on January 1, 2034. The higher tax rate is intended to hit the influx of Alaska summertime tourists.
As noted, SB 277’s sales and use tax would be imposed on personal property and services. “Personal property” is broadly defined to mean property that is perceptible to the senses and explicitly includes, among other things, electricity, Internet services, electronic or digital goods, and prewritten computer software. The term “Internet services” is not defined but as noted below, the sale of Internet access is exempt (presumably to comply with the Internet Tax Freedom Act). The term (and the tax) excludes real property and intangible property. And “services” generally means an activity engaged in for another person for consideration. While the “services” definition includes examples of taxable services (e.g., professional services, cable subscriptions, and telephone or other communications services), the definition is not limited to those examples. Of note, “services” includes “the use of a computer, computer time, a computer system, a computer program, a computer network, or any part of a computer system or network,” which would likely include SaaS, PaaS, and other remote access software models.
The bill provides for several common sales exemptions, such as sales for resales, Internet access, isolated or occasional sales, and food – but with notable deviations. For example, the resale exemption applies to the resale of personal property – but not resale services. Likewise, SB 277 limits “isolated or occasional sales” to “fundraising activities conducted by a nonprofit organization that do not exceed 60 consecutive days in duration.” Finally, the exemption for food only applies to purchases made with subsidized federal government resources like WIC or SNAP. Thus, all other food purchases (whether groceries or prepared food from a restaurant) would be subject to the tax.
Under the bill, the Alaska Department of Revenue is authorized, but not required, to enter into the Streamlined Sales and Use Tax Agreement, or a substantially similar agreement. Ironically, however, Alaska would have to make several changes to its sales and use tax law, as currently drafted in SB 277, to comply with the Agreement. For example, the proposed rate structure and “personal property” definition, among other things, would not substantially comply with the terms of the Agreement.
SB 277 also makes changes to Alaska local sales and use tax. The bill specifically makes a local sales and use tax subject to “exemptions, definitions, sourcing rules, and regulations” under the state sales and use tax. This means that, for example, localities could no longer determine which sales are exempt from their local sales and use tax. SB 277 also requires that all local sales and use taxes “shall be administered and collected by the state[.]”
Lastly, SB 277 only goes into effect if HB 274 (amending the legislative audit powers), HB 275 (relating to changes to the permanent fund dividend calculation), and HJR 30 (proposing constitutional amendments to the Alaska Permanent Fund) or such similar bill/resolution is enacted into law this year. The sales tax would go into effect 12 months after enactment, assuming all of the other requirements are satisfied.
Corporate income tax changes
On January 22, 2026, the Alaska Legislature failed to override the Governor’s veto of SB 113 from late last year. SB 113 would have adopted market-based sourcing and created an apportionment method for “highly digitized businesses” based on a single-sales factor. The Governor vetoed SB 113 because he was unwilling to approve any tax measure that was not part of a comprehensive, long-term plan intended to balance revenue and expenses.
SB 277 also adopts market-based sourcing but does not create a special apportionment method for “highly digitized businesses.” The bill also expands the scope of income apportionable to Alaska by including income arising from tangible and intangible property if the employment or development of the property is or was related to the operation of the taxpayer’s trade or business.
Currently, Alaska has a graduated corporate income tax rate that tops out at 9.4% for taxable income over $222,000.[3] SB 277 would permanently reduce the corporate income tax rate to 0% beginning January 1, 2031 (i.e., there would be no phasedown of the rate).
The Eversheds Sutherland SALT Team will monitor the progress of SB 277 throughout the legislative process.
[1] SB 277 defines “marketplace facilitator” as “a person that contracts with sellers to facilitate the sale of the seller’s product through a physical or electronic marketplace operated by the person and collects the payment from the purchaser.”
[2] Some states do have varying tax rates for other classifications. For example, Hawaii’s version of the sales tax (the general excise tax), has a general rate of 4% but also has a reduced rate of 0.5% for certain services (e.g., wholesaling and manufacturing). Haw. Rev. Stat. § 237-13. In 2025, Maryland enacted a legislation to expand the definition of services to include certain data services, information technology services, and other similar services but only imposed a tax rate of 3% or half the general sales and use tax rate. Md. Code, Tax-Gen. § 11-104(l)(1). While Connecticut only imposes a 1% rate on computer and data processing services. Conn. Gen. Stat. § 12-408(1)(D).
[3] Alaska Stat. § 43.20.011(e).