Comprehensive Guide to Payroll Taxes in Alaska

Employers have to navigate a variety of regulations and requirements to ensure proper payroll withholding in each US state. This guide serves as an introduction to what employers need to pay and withhold from payroll in Alaska, including unemployment insurance, personal income tax, and workers’ compensation. 

Withholding personal income tax from your Alaska employee

Unlike most other states, Alaska does not impose a state income tax on its residents, meaning it is one of the few states that does not have an individual income tax. 

However, Alaska employees may still be liable to pay federal income tax as mandated by the Internal Revenue Service (IRS). The employer withholds federal income tax on behalf of the employee, ensuring that the employees meet the necessary tax obligations throughout the year. Employers in Alaska must stay updated with changes in federal tax laws and regulations, ensuring compliance with tax obligations. 

For more information on paying taxes in Alaska, visit the State Department of Commerce, Community, and Economic Development.

Paying state unemployment insurance (SUI)

This is the only state payroll tax in Alaska. The SUI tax funds unemployment benefits for workers who are laid off for reasons beyond their control. The Alaska Department of Labor and Workforce Development's Employment Security Tax Division administers this tax.

Both the employer and the employee contribute to unemployment insurance premiums in Alaska. Deductions for UI are shown in a statement, alongside other deductions made from an employee’s wages. 

Other federal taxes withheld from wages include Medicare and Social Security. Together, these taxes are known as employer payroll taxes or payroll withholding, and they help to fund various government programs and benefits. 

The US Department of Labor administers unemployment insurance, and employers in Alaska can manage their payments through the Alaska Department of Labor and Workforce Development. For more information on paying your unemployment insurance, see the Alaska government website. 

The experience rate for employers is determined annually based on their quarterly payroll reporting history.

Reporting and Payment Deadlines

Employers must report new hires within 20 days, providing the following information:

• Employee name
• Employee address
• Social Security Number
• Employer's federal tax ID number (EIN)
• Employer's name and address

SUI taxes and contribution reports are due quarterly, with the following deadlines:

If a deadline falls on a weekend or federal holiday, it is extended to the next business day.

Online Tax Payments and Reports

Employers must use the MyAlaska portal for online tax payments and reports. Businesses with 50 or more employees are required to complete all payroll-related tasks online.

Additional Considerations

• Local municipalities in Alaska may levy their own sales taxes.
• The State of Alaska Department of Administration Division of Finance can audit tax returns.
• Nonprofits in Alaska are subject to payroll taxes if they pay an employee $250 or more in a quarter or have four or more employees for 20 weeks in a year.

Paying your Alaska workers’ compensation

As an employer in Alaska, you are responsible for paying workers’ compensation to protect both your business and the employees. Workers’ compensation provides coverage for employees who suffer work-related injuries or illnesses, offering medical benefits and wage replacement during their recovery period. 

Employers are required to carry workers’ compensation insurance, even if you only hire one employee in Alaska. Selecting a reputable insurance provider and accurately reporting employee wages is essential to ensure proper coverage and compliance with state law. Alaska’s Department of Labor and Workforce Development offers more information on workers’ compensation requirements for employers online.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Alaska payroll taxes, federal and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel.

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can simplify your US payroll processes and ensure compliance with state regulations.