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 and not allocated under Alaska law. Taxpayers are given the option to apportion their income based on the laws of the states in which they operate, with clear criteria established for various types of income, including rents, royalties, and capital gains. The bill also modifies existing language for clarity, replacing "business income" with "apportionable income" and detailing the conditions for income to be considered apportionable.

Additionally, the bill 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 tax administration, ensuring consistency across jurisdictions. The bill also outlines procedures for arbitration in tax disputes, including the selection of board members and the finality of their determinations. Key changes include the replacement of "business" with "apportionable" in various sections and the introduction of specific criteria for highly digitized businesses. These provisions will take effect on January 1, 2026, applying to tax returns for tax years beginning on or after that date, with the overall aim of modernizing and clarifying Alaska's tax apportionment process.

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