Easily manage employment in Alaska

Payroll management in Alaska

Alaska’s economy is heavily influenced by industries such as oil and gas, fishing, tourism, and transportation. As the only state without a state income tax or sales tax, Alaska presents unique payroll considerations for employers. While the absence of income tax simplifies payroll calculations, employers must still comply with federal payroll laws, unemployment insurance requirements, and local labor regulations. Understanding these elements ensures businesses remain compliant and operate efficiently in the state.

Payroll breakdown in Alaska

Employers in Alaska must navigate payroll requirements that include federal obligations and state-specific considerations. Below is an overview of the key payroll components:

Minimum wage and overtime

• Minimum Wage: As of 2024, Alaska’s minimum wage is $11.73 per hour, and it is adjusted annually based on inflation.
• Overtime Rules: Alaska follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Employees working more than eight hours in a single day must be paid overtime unless they are under an approved alternative workweek agreement.

State income tax

• Alaska does not have a state income tax, which simplifies payroll tax withholdings for employers.

Unemployment insurance (UI) tax

• Employers must contribute to Alaska’s Unemployment Insurance (UI) program, which is managed by the Alaska Department of Labor and Workforce Development (DOLWD).
• The wage base for UI tax in Alaska is $47,100 as of 2024.
• UI tax rates vary based on an employer’s experience rating but generally range between 1.0% and 5.4%.
• Employees are also required to contribute to UI, with a withholding rate that varies annually.

Workers’ compensation

• Alaska mandates that nearly all employers provide workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
• Exceptions include self-employed individuals and certain small fishing operations.

Payroll tax filing and payment deadlines

• Employers must register for an Alaska Employer Account Number with the DOLWD for unemployment insurance contributions.
• Quarterly UI tax reports must be submitted electronically via the Alaska DOLWD website.
• Federal payroll taxes (Social Security, Medicare, and federal unemployment tax) must be withheld and deposited per IRS deadlines.

Quick facts: Important considerations for employers

• No State Income Tax: Employers do not need to withhold state income tax from employee wages, reducing payroll processing complexity.
• No Statewide Sales Tax: Alaska does not impose a statewide sales tax, though some local governments may levy their own sales taxes.
• Final Paycheck Rules: When an employee is terminated, employers must provide the final paycheck within three working days. If an employee quits, the final paycheck must be issued by the next scheduled payday.
• New Hire Reporting: Employers must report new hires to the Alaska New Hire Reporting Center within 20 days of hire to assist with child support enforcement.
• Paid Leave Requirements:
• Alaska does not have a statewide paid sick leave requirement.
• However, employers with 50 or more employees must comply with the Alaska Family Leave Act (AFLA), which provides job protection for eligible employees who need medical or family-related leave.
• Payroll Recordkeeping: Employers must keep payroll records, including hours worked and wages paid, for at least three years to comply with federal and state labor laws.
• Business-Friendly Environment: While Alaska has no state income tax, its remote location and seasonal workforce can present unique payroll challenges for employers, particularly in the tourism and fishing industries.

Run payroll in Alaska with Remote

Running payroll in Alaska requires compliance with unique state-specific regulations, such as unemployment insurance and workers’ compensation requirements. The absence of state income tax simplifies payroll processing, but businesses must stay up to date with labor laws, wage adjustments, and reporting deadlines to avoid compliance risks.

For companies looking to streamline payroll management, Remote’s payroll solutions offer automated processing, tax filings, and compliance support tailored to Alaska’s regulations. Employers can confidently manage payroll while focusing on business growth and employee satisfaction.

To see just how easy global payroll can be, book a demo today.