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Alaska2026Passed Legislature

HB194

Oil and Gas Income Tax for Certain Businesses; Approval of Royalty Oil Sale

Last scannedSep 10, 2026, 12:32 AM

In one sentence

This law creates a new income tax on specific oil and gas businesses in Alaska that are not taxed as corporations, approves the sale of state-owned royalty oil to Marathon Petroleum Supply and Trading Company LLC, and applies these rules retroactively to January 1, 2026.

What it does

  • Imposes a new income tax on qualified entities producing or transporting oil and gas in Alaska based on their taxable income levels.
  • Sets tax rates that start at zero for income under $1 million and rise up to 9.4 percent for income over $5 million.
  • Requires the Department of Revenue to combine the income of related businesses if they act as a single unit or are part of a unitary business with a taxpayer paying this new tax.
  • Approves and ratifies an agreement selling state royalty oil to Marathon Petroleum Supply and Trading Company LLC.
  • Makes the new tax rules effective for any tax year starting on or after January 1, 2026.

Who it affects

  • Sole proprietorships, partnerships, limited liability companies, and other entities producing or transporting oil and gas in Alaska.
  • Entities that are part of a unitary business with an entity paying this new tax.
  • The State of Alaska regarding the sale of its royalty oil assets.

Limits and unknowns

  • The law does not apply to corporations already subject to the existing corporate income tax under AS 43.20.011.
  • Taxpayers cannot use federal tax credits or deductions against this new state liability, except for those allowed specifically for C corporations in certain calculations.

Plain language

Terms to know

Qualified Entity
A sole proprietorship, partnership, limited liability company, or an entity that files federal returns under specific Internal Revenue Code sections related to pass-through taxation.
Unitary Business
Two or more entities treated as a single business for tax purposes because they are closely connected in operations and ownership.

Official record

Sources

Validated
Official bill pageIntroduced textCurrent bill text

Official summary

OIL/GAS CORP. INCOME TAX; ROYALTY SALE 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.

Official activity

Bill history

  1. (S) RECEDE MESSAGE READ2244
  2. (H) FAILED CONCUR (S) AM Y17 N232135
  3. (H) CONCUR MESSAGE TAKEN UP UC2134
  4. (H) CONCUR MESSAGE READ AND HELD2012
  5. (S) VERSION: SCS HB 194(FIN) AM S(EFD FLD S)2096
  6. (S) TRANSMITTED TO (H) AS AMENDED2096
  7. (S) RECONSIDERATION NOT TAKEN UP2095
  8. (S) HOFFMAN NOTICE OF RECONSIDERATION2060
  9. (S) EFFECTIVE DATE(S) FAILED Y13 N6 A12059
  10. (S) PASSED Y12 N7 A12059
  11. (S) AUTOMATICALLY IN THIRD READING2058
  12. (S) TITLE CHANGE: SCR 152060
  13. (S) ...CHANGES TITLE OF LEGISLATION2054
  14. (S) AM NO 1 ADOPTED Y11 N8 A12058
  15. (S) RETURN TO SECOND FOR AMS UC2054
  16. (S) READ THE THIRD TIME SCS HB 194(FIN)2054
  17. (S) ADVANCED TO THIRD READING 3/25 CAL2027
  18. (S) FIN SCS ADOPTED UC2027
  19. (S) READ THE SECOND TIME2027
  20. (S) RULES TO CALENDAR 3/23/20262027