Overview
Alaska is one of nine states that does not levy a state income tax on earned wages. Alaska is one of nine states that does not levy a state income tax on earned wages. This makes payroll simpler for employers, as there is no state income tax withholding to manage. However, employers are still responsible for federal taxes and the state unemployment insurance contribution.
State Income Tax (SIT)
Alaska does not impose a state income tax on individual wages. This means employers do not need to withhold any state income tax from employee paychecks. Employees get to keep more of their gross pay, and payroll administrators have one fewer withholding calculation to manage.
Setup Note: Even though there is no state income tax, if you have employees who work in multiple states, you may still need to set up Alaska in your payroll system to ensure multi-state withholding calculations work correctly.
Employer State Unemployment Tax (SUTA)
Even without a state income tax, Alaska employers are still required to pay into the state’s unemployment insurance fund.
Your specific SUTA rate will be assigned by the state based on your company’s history with unemployment claims. New employers typically start at the default rate until they build enough experience for an individualized rate.
| Tax Type | Employer-paid (not deducted from employee wages) |
| Default New Employer Rate | 1.0% |
| Rate Assignment | Experience-rated; assigned annually by the state based on unemployment claims history |
Federal Taxes That Apply
While Alaska keeps things simple at the state level, all standard federal payroll taxes still apply.
| Federal Income Tax (FIT) | Based on W-4 — Employee (withheld by employer) |
| Social Security (FICA) | 6.2% each — Employee and Employer |
| Medicare | 1.45% each — Employee and Employer |
| Additional Medicare | 0.9% — Employee only (wages over $200K) |
| FUTA | 6.0% (typically 0.6% after credit) — Employer only |
What This Means for Your Payroll
Running payroll in Alaska is relatively straightforward. Without a state income tax, you’ll primarily focus on federal withholdings and the employer-paid SUTA contribution. The key things to stay on top of are making sure your SUTA rate is current each year and that federal withholdings are calculated correctly based on each employee’s W-4.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal, tax, or accounting advice. Netchex does not provide tax or legal guidance and makes no representations regarding the accuracy or applicability of this information. Laws and regulations may change. The information on this page reflects payroll tax guidelines as of March 2026.
For the most current requirements, please refer to: Alaska Department of Labor and Workforce Development
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