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In a historic move to raise new revenue and invest in education, the Alaska Legislature has approved a long-debated corporate tax bill for online businesses operating in the state. The measure is projected to generate substantial funds for Alaska’s public schools, marking the state’s first major revenue-raising law in over a decade.
On Wednesday, the Alaska House voted 26–14 in favor of Senate Bill 113, which updates the state’s corporate income tax structure to include market-based sourcing for digital and online businesses. The bill targets companies that generate at least 50% of their sales through the Internet, particularly those delivering goods or services to Alaska residents, ensuring they pay their fair share into the state’s economy.
The revenue raised by this legislation will help fund House Bill 57, a bipartisan education funding package now awaiting action from Governor Mike Dunleavy.
Leveling the Playing Field in the Digital Economy
Sen. Bill Wielechowski (D-Anchorage), the sponsor of SB 113, called the measure “critically needed” and praised its approval.
“It can generate some much-needed revenue for education funding, and it is not going to result in any new taxes on Alaskans,” Wielechowski said.
The bill is designed to correct a long-standing loophole. Large online retailers and digital platforms often avoid taxation by claiming their sales occur outside Alaska at distant data centers, corporate headquarters, or warehouses. By shifting to a market-based sourcing model, Alaska asserts its right to tax sales made to Alaskans, regardless of where the seller is physically located.
“When a sale is made over the internet, they often use our state-funded broadband,” Wielechowski told the House Finance Committee.
“It’s shipped into our ports, driven on our roads, and delivered to our homes. Yet, the corporations benefiting from this infrastructure pay little or nothing back.”
While the measure saw bipartisan backing, with support from both Democratic and Republican legislators, it also revealed partisan divides.
Among those voting in favor were lawmakers from urban and rural districts across party lines, who emphasized fairness for local businesses and communities. They included Reps. Robyn Niayuq Burke (D-Utqiagvik), Bryce Edgmon (I-Dillingham), and Justin Ruffridge (R-Soldotna).
Twenty-six members voted in favor, while 14 opposed, including some conservative Republicans like Jamie Allard (R-Eagle River) and Kevin McCabe (R-Big Lake), who expressed concerns about broader tax implications.
Still, support extended beyond traditional partisan boundaries. Sen. Rob Yundt (R-Wasilla) penned a widely circulated op-ed in the Anchorage Daily News, arguing the bill protects Alaskan jobs and businesses from unfair competition by mega-corporations.
“Highly digitized businesses rake in hundreds of millions of dollars from Alaskans without ever setting foot here,” Yundt wrote.
“They undercut local retailers and displace jobs while using state infrastructure for free.”
No Cost to Alaskans, No Double Taxation
Critically, the bill avoids placing new tax burdens on Alaska consumers. Because companies are barred from being taxed twice on the same income under U.S. law, income taxed in Alaska will be deducted from their obligations elsewhere.
With SB 113 approved, the spotlight turns to Governor Mike Dunleavy, who must decide whether to sign or veto House Bill 57, the education funding measure now backed by this new revenue stream.
If signed into law, the corporate tax could become a long-term pillar of education funding, reversing years of budgetary stagnation in Alaska’s public school system.
The passage of SB 113 signals a notable shift in Alaska’s approach to revenue away from its near-total reliance on oil and gas taxes and toward modernizing its economy in line with digital commerce trends.
In an era where education funding has been a persistent point of contention, the move is both fiscally and politically significant. It aligns Alaska with other states adopting digital taxation practices and addresses growing concerns about economic fairness in a rapidly digitizing world.
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