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 introduces new definitions, such as "apportionable income," which refers to income subject to apportionment under the U.S. Constitution rather than being allocated under state laws. Taxpayers are allowed to elect to apportion their income based on the laws of the states where they operate, with specific criteria outlined for various types of income, including rents, royalties, and capital gains. Additionally, businesses that solely engage in sales can report and pay taxes based on a percentage of their gross sales, with a threshold of $100,000, which the Multistate Tax Commission can adjust every five years.

The bill also establishes the Multistate Tax Commission, composed of representatives from each party state, to study tax systems, recommend uniformity proposals, and conduct audits. It grants the commission the authority to adopt uniform regulations and forms related to income and sales taxes, ensuring transparency through annual reports. Key amendments include the replacement of the term "business" with "apportionable" in several sections to clarify the income subject to apportionment, and the introduction of specific provisions for highly digitized businesses, which will have their apportionment factor based solely on sales. These new regulations will take effect for tax years beginning on or after January 1, 2026, aiming to modernize tax regulations in response to the evolving digital commerce landscape.

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