QuickBooks Blog
A woman calculating payroll taxes in Alaska
Alaska

Alaska payroll taxes: Your 2026 guide to staying compliant

By QuickBooks
Published on January 26, 2026

Alaska, often called "The Last Frontier," boasts a unique economy heavily influenced by its abundant natural resources, particularly oil and gas, fishing, and tourism. These industries drive significant economic activity and support a diverse array of small businesses. In 2024, the Alaska Small Business Development Center (Alaska SBDC) reported a record-setting year, with entrepreneurs launching 132 new businesses and contributing to $82.7 million in reported sales growth statewide. For businesses operating in Alaska, understanding payroll taxes is a critical component of successful financial management.

Taxes withheld from employee wages and paid by employers to various government agencies help to fund essential programs and services. This guide walks you through the intricacies of payroll taxes in Alaska, helping you navigate your responsibilities and ensure compliance.

Jump to:

What are payroll taxes?

Payroll taxes are taxes based on wages, salaries, or other compensation that both employers and employees must pay. While income taxes are also withheld through payroll, payroll taxes specifically fund programs like Social Security, Medicare, and unemployment insurance.

Understanding Alaska state payroll taxes

When starting a business in Alaska, you'll need to understand both federal and state payroll taxes.

Federal payroll taxes

Payroll taxes are mandatory and encompass both federal and state requirements.

Federal payroll taxes include:

  • Federal income tax: This is withheld from each employee's paycheck based on their W-4 form and the current IRS tax brackets. You'll be responsible for calculating the correct amount, withholding it, and then sending it to the IRS.
  • Social Security and Medicare taxes: Both of these taxes have a portion paid by the employee and a matching portion paid by you, the employer. For Social Security, the combined rate was 12.4% on the first $176,100 of wages in 2025. For Medicare, it's 2.9% on all wages, with an extra 0.9% for higher earners. You'll withhold the employee's portion and match it.
  • Federal Unemployment Tax (FUTA): This is paid solely by you at a rate of 6% on the first $7,000 of each employee's wages. However, most employers get a 5.4% credit, reducing the rate to 0.6%. The graphic below lists some best practices for managing your FUTA obligations.
FUTA best practices for small businesses in Alaska


Other important tax considerations

Multiple locations

If your business has employees working in multiple cities or counties, you may be subject to different local taxes and compliance responsibilities for each location.

Changing rates

Payroll tax rates can change over time, so it's important to stay informed about any updates that may affect your business.

Employer responsibilities for payroll taxes in Alaska

As an Alaska employer, you're responsible for managing a complex array of federal and state payroll taxes, which involves careful calculation, timely withholding, and accurate reporting to various government agencies. Here’s an overview of what you should know.

Registering for payroll taxes

Before you can pay your employees and manage your payroll taxes, you need to register your business with the appropriate state agency. In Alaska, the primary state registration for payroll taxes is for State Unemployment Insurance (SUI).

Here are the general steps to register for payroll taxes in Alaska:

  1. Obtain a Federal Employer Identification Number (EIN): Before registering with the state, you'll need an EIN from the IRS, which serves as your federal tax ID.
  2. Register with the Alaska Department of Labor and Workforce Development: The easiest way to register for an Unemployment Insurance (UI) account is through the myAlaska portal. Select "Employment Security Tax" under “Services for Businesses.” 
  3. Review business licensing: While not directly a payroll tax registration, ensure your business has the necessary state business license and any required local permits. You can search for existing business names or verify availability through the Alaska Division of Corporations, Business, and Professional Licensing.

Calculating payroll taxes

Calculating payroll taxes accurately is essential for compliance. This involves determining the correct amounts for federal and state taxes based on employee wages, withholding allowances, and applicable tax rates.

  • Check government websites: Contact the Alaska Department of Labor and Workforce Development as well as local municipal governments for requirements to ensure compliance with all tax laws, state or otherwise. 
  • Payroll software: Some small business software payroll programs have built-in Alaska tax tables that automate calculations, saving you time and minimizing the chance for errors.
  • Professional services: If you prefer to outsource payroll, a professional payroll service can handle everything for you.

Whichever method you choose, make sure you stay updated on the current tax rates and wage limits, as these can change every year.

Withholding state payroll taxes

Once you've calculated the correct amounts, you'll need to withhold these taxes from your employee’s wages and remit them to the appropriate authorities. Follow Alaska’s guidelines for withholding and remittance timelines to avoid penalties.

State Unemployment Insurance (SUI): The Alaska Employment Security Act requires employers to deduct a portion of the SUI tax from employee wages, which helps fund the state's unemployment benefits program. For 2025, the employee SUI rate was 0.50% on the first $51,700 of taxable wages.

  • Example: If an employee earns $1,000 in a pay period, and their year-to-date wages are below the $51,700 wage base, you would withhold $5.00 ($1,000 x 0.0050) for the employee's SUI contribution. This amount is reported and submitted with the employer's quarterly contribution report.

By applying these calculations to each paycheck, you ensure accurate withholdings and compliance with state requirements.

Remitting state payroll taxes

In Alaska, businesses must remit their State Unemployment Insurance (SUI) contributions (both employer and employee portions) to the Alaska Department of Labor and Workforce Development. Employers are encouraged to use the MyAlaska portal for online tax payments and reports. Businesses with 50 or more employees are generally required to complete all payroll-related tasks online.

Filing payroll tax returns in Alaska

In Alaska, employers must comply with quarterly and annual payroll tax return requirements to meet state and federal obligations. For 2025, Alaska had just one quarterly payroll requirement:

Quarterly requirements

Penalties for late filing or non-compliance and tips for staying organized

Penalties for late filing or non-compliance with payroll tax obligations can be significant. The IRS may impose penalties for failure to deposit employment taxes on time, in the right amount, or in the right way. Penalties vary based on how late the deposit is.

The Alaska Department of Labor and Workforce Development imposes penalties for late filing or payment of Unemployment Insurance contributions. While specific penalty percentages can change, penalties and interest generally accrue on delinquent amounts. It's crucial to file and pay on time to avoid these additional charges.

Maintain accurate records

Keep detailed records of all employee wages, hours worked, withholdings, and tax payments.

Set up a payroll schedule

Establish a clear schedule for payroll processing, tax calculations, and payment due dates.

Utilize online platforms

Use the Alaska Department of Labor and Workforce Development's TaxWeb portal for online filing and payments to ensure timely submission.

Stay informed

Regularly check for updates from the IRS and the Alaska Department of Labor and Workforce Development regarding tax rates, wage bases, and filing requirements.

Consider payroll software

Invest in reliable payroll software that automatically calculates taxes and reminds you of upcoming deadlines. With an Alaska payroll tax calculator, you’ll minimize the risk of errors and avoid missed payments.

Seek professional help

If you have any questions or concerns about payroll taxes, don't hesitate to consult a tax professional or accountant. They can provide expert guidance and help you tackle the complexities of payroll tax compliance.

Pre-tax vs post-tax payroll deductions

Payroll tax credits and incentives

Employers, including those in Alaska, may be eligible for various tax credits and incentives that can reduce their overall tax liability. These credits are designed to encourage certain behaviors, such as hiring specific groups of individuals or investing in particular industries:

Work Opportunity Tax Credit (WOTC)

The WOTC program offers federal tax credits to employers as an incentive to hire people in several specific target groups. These groups include qualified veterans, recipients of certain public assistance, long-term unemployment recipients, and others. See the AlaskaJobs WOTC Employer Guide to learn how to submit and manage your WOTC applications.

Federal Research and Development (R&D) Payroll Tax Credit

Eligible startups and small businesses can apply up to $500,000 per year of the federal R&D tax credit toward their employer portion of Social Security payroll taxes. This offset supports continued investment in research and innovation during early growth stages.

Federal Unemployment Tax Act (FUTA) Credit

Employers who pay their state unemployment insurance (SUI) taxes on time and in full may receive a FUTA credit of up to 5.4%, reducing the effective federal FUTA rate from 6.0% to 0.6% on the first $7,000 of wages per employee.

Mining/Exploration Credits

The Alaska Exploration Incentives Act allows a deduction of up to $20 million of qualified costs for new mines. This can be a 100% credit for eligible exploration costs against future mining license taxes, corporate taxes, and royalties on production. Credits are limited to no more than 50% of the taxes or royalties due to the state in any given year and must be claimed within 15 years of beginning production.

Education Credit

Corporations that pay eligible state taxes may receive a non-transferable Education Tax Credit for contributions to vocational education programs, accredited Alaska universities or colleges, or Alaska Native educational programs and facilities.

Property Tax Abatement (for Anchorage)

Anchorage Municipal Code provides for tax exemptions related to property and inventory for economic development. New or expanding businesses meeting certain criteria may be granted property tax abatement. Specifically, properties in revitalization areas (like Fairview/East Downtown) may qualify for property tax relief for qualifying expenses related to property redevelopment.

Industries frequently benefiting from Alaska business tax credits

  • Mining and natural resource extraction. Given Alaska's rich natural resources, particularly minerals, the state offers incentives like the Mining/Exploration Credits to encourage investment and development in this sector.
  • Energy (oil, gas, and renewable energy). Efforts to encourage increased construction of Liquid Natural Gas (LNG) storage facilities and broader energy development often come with specific tax incentives. While direct payroll tax credits might not be common, broader business incentives can indirectly support job creation in these fields.
  • Construction. With projects like the Willow and Pikka oil fields projected to create thousands of jobs, the construction industry often benefits from the economic activity driven by these large-scale ventures.
  • Tourism and hospitality. The leisure and hospitality industry, particularly with the growth in cruise ship tourism, benefits from a robust visitor economy, though specific payroll tax credits are less common here compared to broader economic development initiatives.

Consult a tax professional to understand what tax credits and incentives you could potentially apply to your business.

Common payroll tax mistakes in Alaska (and how to avoid them)

Even with streamlined processes, mistakes can happen. Being aware of common payroll tax errors can help Alaska businesses avoid costly penalties and ensure compliance.

Misclassifying employees vs. independent contractors

Incorrectly classifying workers as independent contractors when they should be employees has significant implications for payroll taxes, as you don't withhold federal or state payroll taxes for independent contractors. If the state or IRS determines a worker was misclassified, you could be liable for unpaid taxes, penalties, and interest.

Incorrectly calculating wages or taxes

Errors in calculating gross wages, overtime, or applying the correct tax rates (especially for SUI) can lead to under-withholding or over-withholding, resulting in penalties or employee complaints. This includes overlooking wage bases for Social Security, FUTA, and Alaska SUI.

Missing filing and payment deadlines

Failing to file payroll tax returns or remit payments by their due dates is a common mistake that almost always results in penalties and interest charges from both federal and state authorities. Setting up reminders and automating payments can help prevent this.

Failure to adjust for changing tax rates or wage bases

Tax rates, wage base limits (like the SUI wage base), and other regulations change periodically. Not staying updated on these changes can lead to incorrect calculations and non-compliance.

Neglecting new hire reporting

Employers in Alaska are required to report new hires to the state within 20 days. Failure to do so can result in penalties.

Tip: QuickBooks Payroll can help you avoid these common mistakes by automating calculations, tracking deadlines, and keeping accurate records.

How to manage your small business payroll obligations

Understanding the nuances of Alaska's payroll taxes and regulations can take some time. Follow our small business tax preparation checklist and these steps to help you manage your payroll taxes.

Step 1. Partner with a tax professional

Consult a tax professional familiar with Alaska’s payroll taxes and regulations. They can guide you through compliance requirements, local tax nuances, and potential tax benefits for your business.

Step 2. Explore payroll software

Consider using payroll software to streamline your payroll processes. Tools like QuickBooks automate tax calculations, minimize errors, and ensure compliance with Alaska laws.

Step 3. Proactively plan for compliance

Stay informed about Alaska’s payroll tax deadlines and updates. Payroll software combined with expert guidance can help ensure you meet state and local requirements.

Step 4. Optimize your tax strategy

Work with your tax professional to uncover deductions, credits, or other incentives that could benefit your business. Leverage software reports to better understand your payroll data and identify opportunities for savings.

Step 5. Build a financially strong foundation

By combining expert guidance with the right tools, you can efficiently manage payroll taxes and focus on growing your business in The Last Frontier.

What are the payroll taxes in Alaska?

Alaska state payroll taxes encompass State Unemployment Insurance (SUI).

Calculating payroll taxes in Alaska

Payroll tax calculations in Alaska depend on several factors, including:

  • Employee's gross wages
  • Employee's W-4 form (for federal withholding)
  • Taxable wage base

For employees, the main payroll taxes are:

  • Federal income tax
  • FICA (Social Security and Medicare)
  • Alaska State Unemployment Insurance (SUI) – Employee portion

For employers, the main payroll taxes are:

  • Federal Unemployment Tax (FUTA)
  • Alaska State Unemployment Tax (SUI) - Employer Portion

It’s essential to stay updated on the current rates and regulations, as they can change annually.

Leverage payroll software for compliance in Alaska

Managing payroll in Alaska requires accuracy. Errors can lead to penalties and legal risks, but QuickBooks streamlines payroll management to ensure compliance. It automatically calculates, files, and pays federal and state payroll taxes—with a 100% accuracy guarantee.** You'll stay current with Alaska tax law changes, easily generate reports for filings, and get up to $25,000 in penalty coverage if issues arise.**


*Disclaimer:*

****Accuracy Guaranteed**: Available with QuickBooks Online Payroll Core, Premium, and Elite. We assume responsibility for federal and state payroll filings and payments directly from your account(s) based on the data you supply. As long as the information you provide us is correct and on time, and you have sufficient funds in your account, we’ll file your tax forms and payments accurately and on time or we’ll pay the resulting payroll tax penalties. Guarantee terms and conditions are subject to change at any time without notice.

Tax penalty protection: If you receive a tax notice and send it to us within 15 days of the tax notice we will cover the payroll tax penalty, up to $25,000. Additional conditions and restrictions apply. Only QuickBooks Online Payroll Elite users are eligible to receive tax penalty protection.

*This content is for information purposes only and information provided should not be considered legal, accounting or tax advice or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. cannot warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.*


Recommended for you

Mail icon
Get the latest to your inbox
No Thanks

Get the latest to your inbox

Relevant resources to help start, run, and grow your business.

By clicking “Submit,” you agree to permit Intuit to contact you regarding QuickBooks and have read and acknowledge our Privacy Statement.

Thanks for subscribing.

Fresh business resources are headed your way!

Looking for something else?

QuickBooks

From big jobs to small tasks, we've got your business covered.

See how it works

Firm of the Future

Topical articles and news from top pros and Intuit product experts.

See how it works

QuickBooks Support

Get help with QuickBooks. Find articles, video tutorials, and more.

See how it works