Alaska sales tax guide for businesses

Running a business in Alaska comes with a unique set of challenges when it comes to sales tax. While there is no statewide sales tax, local jurisdictions levy their own rates, which can vary significantly depending on the city. For business owners operating in Anchorage, Juneau, Fairbanks, or smaller communities like Ketchikan and Palmer, understanding and keeping up with these local rates is essential for staying compliant and avoiding penalties. Below, we’ve broken down everything you need to know about Alaska’s local sales taxes, exemptions, and how DAVO by Avalara can help manage them for your business.

Does Alaska have sales tax?

Alaska does not have a statewide sales tax, making it one of the few states in the U.S. without this tax. However, many local jurisdictions, cities, and boroughs have the authority to levy their own sales taxes. This means that while there’s no uniform state-level sales tax, businesses operating in cities like Craig, Fairbanks, and Juneau may still be responsible for collecting and remitting local sales taxes based on the rates set by those municipalities.

What is the sales tax rate in Alaska?

While Alaska does not have a statewide sales tax, many local jurisdictions impose their own sales taxes. Local sales tax rate can range from 1% to 8%. This means businesses must pay attention to the specific rates in the cities where they operate. For example:

• Anchorage – 0% (no city sales tax)
• Craig – 6% – 7% (this rate varies by season)
• Fairbanks – 0% (no city sales tax)
• Juneau – 5% 
• Kenai – 6% (3% city and 3% borough)
• Ketchikan – 5.5% – 8% (this rate varies by season)
• Kodiak – 7% (4% city and 3% borough)
• North Pole – 3%
• Palmer – 3%
• Wasilla – 2.5%

For remote sellers, the Alaska Remote Seller Sales Tax Commission (ARSSTC) provides a list of communities with their respective sales tax rates, or you can buscar by street address. Keep in mind that not all local jurisdictions participate in the ARSSTC, but most of them do. 

How to calculate Alaska sales tax?

Calculating sales tax in Alaska is different from other states because there is no statewide rate. Taxes are set entirely at the local level. This means the rate you charge depends on the city or borough where the sale takes place.

For cities located within a borough, the rules can get a bit more nuanced. If a sale occurs within the borough but outside the city limits, only the borough’s sales tax rate applies. However, if the sale occurs inside a city that sits within a borough, both the city and borough rates may apply, resulting in a combined sales tax.

Example: Suppose you run a store in Kenai, which has its own 3% sales tax, and the surrounding borough imposes an additional 3% tax. A customer buys a $100 item inside Kenai city limits. You would collect a total of $6 in sales tax, $3 for the city, and $3 for the borough. 

Because Alaska’s rates and rules vary so widely, it’s important for business owners to confirm the applicable rate for each location where sales occur. Doing so ensures you’re collecting the correct amount and staying compliant with local regulations.

Use our sales tax calculator

To quickly figure out how much sales tax you need to remit in Alaska, enter the combined local sales tax rate and your total sales into our calculadora de impuestos sobre las ventas. It will automatically compute the amount you owe.

DAVO can take the guesswork out of managing local sales taxes. By connecting directly with your POS system, DAVO automatically calculates the correct sales tax for every transaction based on the city and borough where the sale occurs. This helps businesses in Fairbanks, Juneau, Kodiak, and beyond stay accurate and compliant, while freeing up time to focus on running your business.

What is subject to sales tax in Alaska?

Since Alaska doesn’t have a statewide sales tax, what’s taxed or exempt can vary depending on the locality. In areas that do impose a sales tax, it is commonly applied to prepared foods, tangible personal items, lodging and hotel accommodations, and remote sales. In some localities, certain services, like excursions or haircuts, may also be subject to tax, which is less common in other states.

Items that are often tax-exempt include unprepared groceries, raw fish, and seafood products, though these exemptions can also vary by location. Business owners should always check the local tax regulations for the specific jurisdiction where the sale occurs to ensure compliance.

How to manage tax-exempt sales in Alaska?

Since Alaska’s sales tax system is administered at the local level, tax exemptions also vary by municipality. Each locality has its own rules on what qualifies for exemption and how businesses should document these transactions.

For example, in Juneau, residents aged 65 and older can apply for a sales tax exemption card issued by the City and Borough of Juneau. Other cities may have their own exemptions for specific groups, items, or circumstances.

For business owners, it’s important to refer to the municipality’s guidelines to understand who qualifies and what documentation is required. Most localities will expect you to maintain clear records of exempt sales, such as exemption certificates or copies of exemption cards, in case of an audit. By staying organized and following local rules, you can ensure compliance and avoid unnecessary penalties.

Alaska sales tax holiday

Alaska does not have a statewide sales tax holiday since the state itself does not levy a statewide sales tax. However, some local municipalities may offer temporary sales tax suspensions or “tax-free days.” These events are established and managed at the local level.

For example, the City of Kenai has held an annual sales tax holiday in the past, typically around the Thanksgiving shopping weekend, allowing residents to make purchases without paying local sales tax. Other communities, such as Wasilla and Sitka, have occasionally hosted similar events.

Sales tax holidays in Alaska are set locally, and participation varies year to year. It’s best to check with your city or borough government for the most current information on any upcoming tax-free periods.

How to register for an Alaska sales tax permit?

Without a statewide sales tax, there’s no single state-level registration for a sales tax permit. Instead, businesses must register locally with the city or borough where they operate. The process and requirements can vary depending on your location.

In most cases, you’ll first need to obtain an Alaska business license through the Department of Commerce, Community, and Economic Development and pay the required licensing fee. Once your business license is approved, you can register with your local city or borough to obtain a sales tax permit, if that jurisdiction imposes a sales tax.

Each locality manages its own registration process, so it’s best to visit your local government’s website for detailed instructions, required forms, and fee information. For remote sellers, there are additional requirements and rules that you’ll need to comply with before collecting sales tax.

How to get an Alaska remote seller sales tax permit?

If you’re a remote seller or marketplace facilitator without a physical presence in an Alaskan city or borough, you should be aware of the Alaska Remote Seller Sales Tax Commission (ARSSTC) rules. The ARSSTC was created to simplify remote sales tax collection for Alaska jurisdictions that join the system.

If your remote sales into Alaska exceed the economic nexus threshold of $100,000 in gross sales, you’re required to register with ARSSTC. After registering, you’re required to collect and remit local sales tax for jurisdictions that are participating members. Visit the ARSSTC site for more details and how to register.

How to file and pay sales tax returns in Alaska?

When it comes to filing and remitting sales tax in Alaska, it will depend on the specific city or borough where you operate. Some local jurisdictions that impose a sales tax provide their own online portals, while others rely on mail-in returns or use a third-party service for filing. Here are a few examples:

• Juneau – Businesses can pay and file their sales tax through the CBJ portal.
• Kenai – This jurisdiction also provides an online portal for businesses to file and pay their sales tax returns. Instructional videos are available to help businesses through the process.
• Kodiak – For details on their tax ordinances, you can visit their rate and forms page, which includes a link to their online portal for filing returns. Another option is filling out and mailing the sales tax return form.
• North Pole – The City of North Pole does not currently offer an online portal for filing or paying sales tax returns. However, businesses can complete the monthly o quarterly forms and mail them to North Pole City Hall along with payment. For those who prefer to file electronically, the city partners with a third-party service provider to process returns and payments online. Always verify that you are using the correct, city-approved third-party platform before submitting any sensitive information to avoid scams or fraudulent websites.

Despite the differences in how each jurisdiction handles sales tax filing, the accepted payment methods are generally consistent across Alaska. Most localities allow businesses to pay by mailing a paper check, submitting an ACH or eCheck, or using a credit or debit card. Keep in mind that some jurisdictions charge a convenience fee for card payments, including debit cards. So it’s always best to review your local government’s payment policies before submitting your return. 

Managing this process accurately and on time can be time-consuming, especially when juggling other business responsibilities. That’s where DAVO comes in. DAVO automates the daily collection, filing, and payment of sales tax, helping business owners stay compliant without the stress of managing deadlines or manual calculations.

For remote sellers, the ARSSTC offers a tax filing portal to help consolidate filing and paying sales tax for multiple jurisdictions in one place.  

When are Alaska sales tax returns due?

For most Alaska jurisdictions that impose a sales tax, monthly returns and payments are due on the last day of the month following the reporting period. For example, if you’re filing for December, your return and payment would be due January 31. If the due date falls on a weekend or holiday, it automatically moves to the next business day.

Many municipalities, such as Juneau, North Pole, and Ketchikan, follow this monthly schedule. Some also offer quarterly filing options. In those cases, the due date is typically the last day of the month following the end of the quarter. For instance, if you’re filing for January through March, your return would be due April 30.

However, not all jurisdictions follow the same calendar. For example, Kenai requires that returns and payments be submitted one month and one day after the reporting period ends, meaning the June filing period is due August 1. Because filing deadlines vary across Alaska, always confirm the due date with your local municipality to avoid late penalties.

Sales Tax Discount

Some localities also offer sales tax discounts as an incentive for filing and paying on time. In Juneau, businesses can earn a $30 discount for filing electronically and submitting payment on time. In Kenai, eligible businesses can receive a 5% credit, capped at $1,000 per quarter, when they file and pay promptly.

Penalties for Late Filing or Payment in Alaska

Because Alaska’s sales tax is administered locally, penalties and interest for late filing or payment vary by jurisdiction. Each city or borough determines its own rules for how late returns and payments are handled, and the consequences can be steep if you miss a deadline.

For example, in Ketchikan, businesses that file or pay late face a $25 late filing fee per month, up to a maximum of $100. Any delinquent sales tax accrues interest at 15% per year, along with an additional 5% penalty per month (up to a total of 20%) on the unpaid balance. While the penalty itself doesn’t accumulate interest, it can add up quickly for business owners who fall behind.

In the city of North Pole, the penalties are even more detailed. A business that files less than 30 days late will incur a $25 late fee (or the maximum interest rate allowed by law, whichever is higher), and those that file between 30 and 60 days late face a $50 fee. After 61 days, a recurring $50 monthly fee applies until the balance is paid in full, and interest accrues at 10.5% annually, applied monthly. Businesses that remain 90 days delinquent may have their business licenses automatically revoked and receive a cease and desist order. Habitually late filers risk additional enforcement actions, including liens and potential legal proceedings.

While each locality enforces its own fee structure, interest rate, and enforcement process, it’s essential for business owners who operate in Alaska to review the local tax code and stay on top of filing deadlines. In some municipalities, repeated late filings can even result in a lien placed on your business, a costly and time-consuming issue to resolve.

Simplify Alaska Sales Tax with DAVO

Managing sales tax in Alaska can feel uniquely challenging. Without a statewide system, every city and borough sets its own rules. Each with different filing deadlines, rates, and penalties. If your business operates in multiple locations, the complexity only grows. From keeping track of Juneau’s online filing to staying compliant in North Pole or Kenai, it’s easy for busy business owners to feel stretched thin.

That’s where DAVO comes in. DAVO automatically sets aside the sales tax you collect, files your return, and makes your payment on time and in full, no matter how your local jurisdiction operates. Whether you’re running a hotel in Kodiak or a café in Palmer, DAVO takes the guesswork out of sales tax management so you can focus on growing your business and serving your community.
DAVO integrates directly with your existing POS system, making setup seamless. Once connected, you can rest easy knowing your Alaska sales tax is handled accurately, securely, and automatically, every time, on time, garantizado,.

Start simplifying your Alaska sales tax today. Choose your POS system to get started with DAVO.

Additional Alaska Sales Tax Information:

Departamento de Ingresos de Alaska

(907) 465-2300
Alaska Remote Seller Sales Impuesto Commission

(907) 790-5300