The bill amends the Alaska Net Income Tax Act to incorporate provisions related to the Multistate Tax Compact, specifically focusing on the apportionment of income for highly digitized businesses. It establishes definitions for key tax-related terms, such as "apportionable income," and clarifies the treatment of various income types, including business income and non-apportionable income. A significant feature of the bill is the introduction of a taxpayer option for income tax apportionment, allowing taxpayers to choose between state-specific methods or those outlined in the compact. Additionally, it sets a threshold for taxpayers whose activities consist solely of sales, enabling them to report taxes based on a percentage of their gross sales if they do not exceed $100,000, with provisions for adjusting this threshold over time.

The bill also establishes the Multistate Tax Commission, which will consist of representatives from each party state and is tasked with studying tax systems, recommending uniformity in tax laws, and conducting audits. It grants the commission the authority to adopt uniform regulations and forms related to tax administration, while also ensuring transparency through annual reports. Furthermore, the bill amends various sections of Alaska's tax law, particularly regarding the apportionment of income for water transportation carriers, oil and gas production, and highly digitized businesses, including the replacement of the term "business" with "apportionable" in several sections. It outlines procedures for arbitration in tax disputes and specifies that the new provisions will take effect on January 1, 2026, applying to tax returns for tax years beginning on or after that date.

Statutes affected:
SB0113A, AM SB 113, introduced 02/26/2025: 43.19.010, 43.20.143, 43.20.144, U.S.C, 43.20.145, 43.20.142, 43.20.148, 43.20.146
SB0113Z, AM Enrolled SB 113, introduced 05/07/2025: 43.19.010, 43.20.143, 43.20.144, U.S.C, 43.20.145, 43.20.142, 43.20.148, 43.20.146