Legislature(2025 - 2026)
2026-03-25 Senate Journal
Full Journal pdf2026-03-25 Senate Journal Page 2054 HB 194 SENATE CS FOR HOUSE BILL NO. 194(FIN) "An Act approving and ratifying the sale of royalty oil by the State of Alaska to Marathon Petroleum Supply and Trading Company LLC; and providing for an effective date" was read the third time. Senator Dunbar moved the bill be returned to second reading for the purpose of a specific amendment, that being Amendment No. 1. Without objection, the bill was returned to second reading. Senator Dunbar offered Amendment No. 1 : Page 1, line 1, following "Act": Insert "establishing an income tax on certain entities producing or transporting oil or gas in the state;" 2026-03-25 Senate Journal Page 2055 Page 1, following line 4: Insert new bill sections to read: "* Section 1. AS 43.20 is amended by adding a new section to read: Sec. 43.20.019. Tax on income attributable to a qualified entity. (a) Each taxable year, a tax is imposed on the entire taxable income derived from sources in the state of every qualified entity. The tax is computed as follows: If the taxable income is: Then the tax is: Less than $1,000,000 zero $1,000,000 but less than $2,000,000 5 percent of the taxable income over $1,000,000 $2,000,000 but less than $3,000,000 $50,000 plus 6 percent of the taxable income over $2,000,000 $3,000,000 but less than $4,000,000 $110,000 plus 7 percent of the taxable income over $3,000,000 $4,000,000 but less than $5,000,000 $180,000 plus 8 percent of the taxable income over $4,000,000 $5,000,000 or more $260,000 plus 9.4 percent of the taxable income over $5,000,000. (b) For purposes of calculating taxable income under this section, (1) taxable income of a qualified entity is determined under AS 43.20.144 as if the qualified entity were taxable as a C corporation, as defined by 26 U.S.C. 1361(a)(2) (Internal Revenue Code), as that section read on January 1, 2026; (2) notwithstanding AS 43.20.021 and AS 43.20.036, the taxpayer may not apply as a credit or deduction against tax liability a credit or deduction allowed as to federal taxes under 26 U.S.C. (Internal Revenue Code), except that the taxpayer may take a credit or deduction allowed for a C corporation under (1) of this subsection. (c) The tax under this section does not apply to a corporation subject to tax under AS 43.20.011 or to an entity that is part of a unitary business with a corporation subject to tax under AS 43.20.011. (d) For the purpose of determining the tax due under this section, the department shall (1) aggregate the taxable income of two or more entities if the department determines that, without the provisions of this section, the taxable income would reasonably be expected to be attributed to a 2026-03-25 Senate Journal Page 2056 single entity; (2) except as provided in (c) of this section, include in the calculation of taxable income of the qualified entity income that is attributable to an entity that is part of a unitary business with the qualified entity paying tax under this section; and (3) adopt regulations to prevent evasion of taxes imposed under this section. (e) When providing a tax return under AS 43.20.030, a qualified entity shall provide the information necessary, as directed by the department, for the department to determine the income of the qualified entity as if the qualified entity were taxable under AS 43.20.011. (f) For purposes of calculating income under this section, a qualified entity may deduct from income a payment to the shareholder, owner, member, or partner of the qualified entity, if (1) the shareholder, owner, member, or partner is a taxpayer under this chapter; (2) the payment does not include a transfer of property; and (3) the payment is included in the shareholder's, owner's, member's, or partner's income for purposes of this chapter. (g) In this section, (1) "qualified entity" means a (A) sole proprietorship; (B) partnership; (C) limited liability company; or (D) entity that has elected to file federal returns under 26 U.S.C. 1361 - 1379 (Internal Revenue Code); (2) "taxable income" means income (A) from the production of oil or gas from a lease or property in the state or from the transportation of oil or gas by pipeline in the state; and (B) of an entity that is part of a unitary business with a carrier or producer paying tax under this section as provided under (d)(2) of this section. * Sec. 2. AS 43.20.030(a) is amended to read: (a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer [CORPORATION] as a partner, is required to make a return under the provisions of the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 days after the federal return is required to be filed, a return setting out 2026-03-25 Senate Journal Page 2057 (1) the amount of tax due under this chapter, less credits claimed against the tax; and (2) other information for the purpose of carrying out the provisions of this chapter that the department requires. * Sec. 3. AS 43.20.031(i) is amended to read: (i) A taxpayer that [CORPORATION WHICH] is a member of a group of unitary corporations or entities that [WHICH] collectively has income from business activity taxable both inside and outside the state, or income from other sources both inside and outside the state, shall determine its income from sources in this state by use of the combined method of accounting." Page 1, line 5: Delete "Section 1" Insert "Sec. 4" Renumber the following bill section accordingly. Page 1, following line 14: Insert new bill sections to read: "* Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to read: APPLICABILITY. The tax established under AS 43.20.019, added by sec. 1 of this Act, applies to a qualified entity for a tax year beginning on or after January 1, 2026. In this section, "qualified entity" has the meaning given in AS 43.20.019(g). * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITION: PAYMENT OF TAX. A person subject to the tax levied under AS 43.20.019, added by sec. 1 of this Act, before the effective date of sec. 1 of this Act, shall pay the balance of the tax due for a tax year ending before January 1, 2027, by January 1, 2027. Until January 1, 2027, the Department of Revenue shall waive interest that would otherwise accrue under AS 43.05.225 and civil and criminal penalties accruing under AS 43.05.220, 43.05.245, and 43.05.290 that are a result of the retroactivity of secs. 1 - 3 of this Act. * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to read: RETROACTIVITY OF REGULATIONS. Notwithstanding a contrary provision of AS 44.62.240, if the Department of Revenue expressly 2026-03-25 Senate Journal Page 2058 designates in the regulation that the regulation applies retroactively to a specific date, a regulation adopted by the department to implement, interpret, make specific, or otherwise carry out secs. 1 - 3 of this Act applies retroactively to that date. * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to read: RETROACTIVITY. Sections 1 - 3 and 5 - 7 of this Act are retroactive to January 1, 2026." Renumber the following bill section accordingly. Senator Dunbar moved for the adoption of Amendment No. 1. Objections were heard. The question being: "Shall Amendment No. 1 be adopted?" The roll was taken with the following result: SCS HB 194(FIN) Second Reading Amendment No. 1? YEAS: 11 NAYS: 8 EXCUSED: 0 ABSENT: 1 Yeas: Claman, Dunbar, Giessel, Gray-Jackson, Hoffman, Kawasaki, Kiehl, Olson, Stevens, Tobin, Wielechowski Nays: Bjorkman, Cronk, Kaufman, Myers, Rauscher, Stedman, Tilton, Yundt Absent: Merrick and so, Amendment No. 1 was adopted. SENATE CS FOR HOUSE BILL NO. 194(FIN) am S “An Act establishing an income tax on certain entities producing or transporting oil or gas in the state; approving and ratifying the sale of royalty oil by the State of Alaska to Marathon Petroleum Supply and Trading Company LLC; and providing for an effective date” was automatically in third reading. 2026-03-25 Senate Journal Page 2059 The question being: "Shall SENATE CS FOR HOUSE BILL NO. 194(FIN) am S “An Act establishing an income tax on certain entities producing or transporting oil or gas in the state; approving and ratifying the sale of royalty oil by the State of Alaska to Marathon Petroleum Supply and Trading Company LLC; and providing for an effective date” pass the Senate?" The roll was taken with the following result: SCS HB 194(FIN) am S Third Reading - Final Passage YEAS: 12 NAYS: 7 EXCUSED: 0 ABSENT: 1 Yeas: Claman, Dunbar, Giessel, Gray-Jackson, Hoffman, Kawasaki, Kiehl, Olson, Stedman, Stevens, Tobin, Wielechowski Nays: Bjorkman, Cronk, Kaufman, Myers, Rauscher, Tilton, Yundt Absent: Merrick and so, SENATE CS FOR HOUSE BILL NO. 194(FIN) am S passed the Senate. Senator Giessel moved for the adoption of the effective date clause. The question being: "Shall the effective date clause be adopted?" The roll was taken with the following result: SCS HB 194(FIN) am S Effective Date Clause(s) YEAS: 13 NAYS: 6 EXCUSED: 0 ABSENT: 1 Yeas: Claman, Dunbar, Giessel, Gray-Jackson, Hoffman, Kaufman, Kawasaki, Kiehl, Olson, Stedman, Stevens, Tobin, Wielechowski Nays: Bjorkman, Cronk, Myers, Rauscher, Tilton, Yundt Absent: Merrick and so, the effective date clause failed.