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HB0194C -1- SCS HB 194(FIN) am S(efd fld S)
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SENATE CS FOR HOUSE BILL NO. 194(FIN) am S(efd fld S)
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-FOURTH LEGISLATURE - SECOND SESSION
BY THE SENATE FINANCE COMMITTEE
Amended: 3/25/26
Offered: 3/4/26
Sponsor(s): HOUSE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
A BILL
FOR AN ACT ENTITLED
"An Act establishing an income tax on certain entities producing or transporting oil or 1
gas in the state; approving and ratifying the sale of royalty oil by the State of Alaska to 2
Marathon Petroleum Supply and Trading Company LLC." 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
* Section 1. AS 43.20 is amended by adding a new section to read: 5
Sec. 43.20.019. Tax on income attributable to a qualified entity. (a) Each 6
taxable year, a tax is imposed on the entire taxable income derived from sources in the 7
state of every qualified entity. The tax is computed as follows: 8
If the taxable income is: Then the tax is: 9
Less than $1,000,000 zero 10
$1,000,000 but less than $2,000,000 5 percent of the 11
taxable income over $1,000,000 12
$2,000,000 but less than $3,000,000 $50,000 plus 6 percent of the 13
taxable income over $2,000,000 14
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SCS HB 194(FIN) am S(efd fld S) -2- HB0194C
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$3,000,000 but less than $4,000,000 $110,000 plus 7 percent of the 1
taxable income over $3,000,000 2
$4,000,000 but less than $5,000,000 $180,000 plus 8 percent of the 3
taxable income over $4,000,000 4
$5,000,000 or more $260,000 plus 9.4 percent of the 5
taxable income over $5,000,000. 6
(b) For purposes of calculating taxable income under this section, 7
(1) taxable income of a qualified entity is determined under 8
AS 43.20.144 as if the qualified entity were taxable as a C corporation, as defined by 9
26 U.S.C. 1361(a)(2) (Internal Revenue Code), as that section read on January 1, 10
2026; 11
(2) notwithstanding AS 43.20.021 and AS 43.20.036, the taxpayer may 12
not apply as a credit or deduction against tax liability a credit or deduction allowed as 13
to federal taxes under 26 U.S.C. (Internal Revenue Code), except that the taxpayer 14
may take a credit or deduction allowed for a C corporation under (1) of this 15
subsection. 16
(c) The tax under this section does not apply to a corporation subject to tax 17
under AS 43.20.011 or to an entity that is part of a unitary business with a corporation 18
subject to tax under AS 43.20.011. 19
(d) For the purpose of determining the tax due under this section, the 20
department shall 21
(1) aggregate the taxable income of two or more entities if the 22
department determines that, without the provisions of this section, the taxable income 23
would reasonably be expected to be attributed to a single entity; 24
(2) except as provided in (c) of this section, include in the calculation 25
of taxable income of the qualified entity income that is attributable to an entity that is 26
part of a unitary business with the qualified entity paying tax under this section; and 27
(3) adopt regulations to prevent evasion of taxes imposed under this 28
section. 29
(e) When providing a tax return under AS 43.20.030, a qualified entity shall 30
provide the information necessary, as directed by the department, for the department 31
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to determine the income of the qualified entity as if the qualified entity were taxable 1
under AS 43.20.011. 2
(f) For purposes of calculating income under this section, a qualified entity 3
may deduct from income a payment to the shareholder, owner, member, or partner of 4
the qualified entity, if 5
(1) the shareholder, owner, member, or partner is a taxpayer under this 6
chapter; 7
(2) the payment does not include a transfer of property; and 8
(3) the payment is included in the shareholder's, owner's, member's, or 9
partner's income for purposes of this chapter. 10
(g) In this section, 11
(1) "qualified entity" means a 12
(A) sole proprietorship; 13
(B) partnership; 14
(C) limited liability company; or 15
(D) entity that has elected to file federal returns under 26 16
U.S.C. 1361 - 1379 (Internal Revenue Code); 17
(2) "taxable income" means income 18
(A) from the production of oil or gas from a lease or property 19
in the state or from the transportation of oil or gas by pipeline in the state; and 20
(B) of an entity that is part of a unitary business with a carrier 21
or producer paying tax under this section as provided under (d)(2) of this 22
section. 23
* Sec. 2. AS 43.20.030(a) is amended to read: 24
(a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer 25
[CORPORATION] as a partner, is required to make a return under the provisions of 26
the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 27
days after the federal return is required to be filed, a return setting out 28
(1) the amount of tax due under this chapter, less credits claimed 29
against the tax; and 30
(2) other information for the purpose of carrying out the provisions of 31
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this chapter that the department requires. 1
* Sec. 3. AS 43.20.031(i) is amended to read: 2
(i) A taxpayer that [CORPORATION WHICH] is a member of a group of unitary 3
corporations or entities that [WHICH] collectively has income from business activity taxable 4
both inside and outside the state, or income from other sources both inside and outside the 5
state, shall determine its income from sources in this state by use of the combined method of 6
accounting. 7
* Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 8
read: 9
ROYALTY OIL SALE CONTRACT WITH MARATHON PETROLEUM SUPPLY 10
AND TRADING COMPANY LLC APPROVED AND RATIFIED. In accordance with 11
AS 38.06.055, the legislature approves and ratifies the Agreement for the Sale of Royalty Oil 12
between and among the State of Alaska, Marathon Petroleum Supply and Trading Company 13
LLC, a Delaware Limited Liability Company, and Marathon Petroleum Corporation, a 14
Delaware Corporation, attached as Exhibit 1 to the "Final Best Interest Finding and 15
Determination for the Sale of Alaska North Slope Royalty Oil to Marathon Petroleum Supply 16
and Trading Company LLC" dated December 19, 2025. 17
* Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 18
read: 19
APPLICABILITY. The tax established under AS 43.20.019, added by sec. 1 of this 20
Act, applies to a qualified entity for a tax year beginning on or after January 1, 2026. In this 21
section, "qualified entity" has the meaning given in AS 43.20.019(g). 22
* Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 23
read: 24
TRANSITION: PAYMENT OF TAX. A person subject to the tax levied under 25
AS 43.20.019, added by sec. 1 of this Act, before the effective date of sec. 1 of this Act, shall 26
pay the balance of the tax due for a tax year ending before January 1, 2027, by January 1, 27
2027. Until January 1, 2027, the Department of Revenue shall waive interest that would 28
otherwise accrue under AS 43.05.225 and civil and criminal penalties accruing under 29
AS 43.05.220, 43.05.245, and 43.05.290 that are a result of the retroactivity of secs. 1 - 3 of 30
this Act. 31
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* Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 1
read: 2
RETROACTIVITY OF REGULATIONS. Notwithstanding a contrary provision of 3
AS 44.62.240, if the Department of Revenue expressly designates in the regulation that the 4
regulation applies retroactively to a specific date, a regulation adopted by the department to 5
implement, interpret, make specific, or otherwise carry out secs. 1 - 3 of this Act applies 6
retroactively to that date. 7
* Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 8
read: 9
RETROACTIVITY. Sections 1 - 3 and 5 - 7 of this Act are retroactive to January 1, 10
2026. 11