AlaskaHB 19434th Legislature - First Session (2025)HouseWALLET

OIL/GAS CORP. INCOME TAX; ROYALTY SALE

Sponsored By: HOUSE RULES BY REQUEST OF THE GOVERNOR

Became Law

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 1 benefits, 3 costs, 2 mixed.

New tax on Alaska oil and gas pass-throughs

Beginning January 1, 2026, Alaska taxes Alaska-source oil and gas income of qualified pass‑through businesses. The rates are $0 under $1,000,000; 5% of income over $1,000,000 up to $2,000,000; $50,000 plus 6% over $2,000,000; $110,000 plus 7% over $3,000,000; $180,000 plus 8% over $4,000,000; and $260,000 plus 9.4% over $5,000,000. The law defines who is a "qualified entity" and counts only income from Alaska oil and gas production or pipeline transport. Taxable income is computed as if the entity were a C corporation. Most federal credits and deductions cannot reduce this state tax.

Owner payment deduction and who is exempt

Starting January 1, 2026, a qualified entity can deduct payments to an owner if three rules are met: the recipient is taxed under this chapter, the payment is not a property transfer, and the recipient includes it as income. Also, the new tax does not apply to corporations already taxed under Alaska’s corporate tax or to their unitary group members. These rules can lower state tax for some pass‑through owners and keep some corporations out of the new tax.

Stronger unitary and combined filing rules

Beginning January 1, 2026, the tax department can combine income from related entities when it belongs to one business and must include unitary business income. The department must adopt rules to prevent tax evasion. Qualified entities must give any information the department asks for with their return. Members of a unitary group with income inside and outside Alaska must use combined accounting to figure Alaska income.

State approves Marathon royalty oil sale

The law approves a specific sale of state royalty oil to Marathon Petroleum. The agreement and the final best interest finding dated December 19, 2025 are part of state law. This changes who receives state oil and can affect state revenue from royalties.

Retroactive start and 2027 transition rules

Sections 1–3 and 5–7 apply as of January 1, 2026. The tax applies to tax years that start on or after January 1, 2026. Anyone subject to the tax before its effective date must pay any balance for years ending before January 1, 2027 by January 1, 2027. Until January 1, 2027, the department waives interest and certain penalties that arise only because of retroactivity. The department may adopt regulations that state a retroactive date when they carry out sections 1–3.

Faster Alaska tax return filing

If you must file a federal return, you must also file an Alaska return within 30 days after the federal due date. Partnerships with such taxpayers follow the same rule. The state return must show tax owed, any credits claimed, and any other information the department requires. This shortens the filing timeline and adds paperwork.

Sponsors & Cosponsors

Sponsor

HOUSE RULES BY REQUEST OF THE GOVERNOR
Affiliation unavailable

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 13 • No: 6

Senate vote • 3/25/2026

EFFECTIVE DATE(S) FAILED Y13 N6 A1