Thursday, October 26, 2017

Alaska Governor Proposes Payroll Tax

PNN: AK Payroll Tax

Alaska Governor Bill Walker recently proposed a 1.5% payroll tax (also called a head tax) on all wages earned in Alaska (by residents and nonresidents). This tax goes up to a cap of $2,200 per employee or twice the previous year’s Permanent Fund Dividend (PFD) amount, whichever is higher [Gov. Bill Walker, Executive Proclamation, 9-22-17, and Press Release No. 17-144, 9-22-17].

According to the governor, the tax would be “a new source of revenue to pay for troopers, teachers, transportation, and other essential services,” which is necessary because of the “downturn in oil prices.” During the past few years, the governor has supported state personal income tax legislation as a means of producing revenue. So far, the state legislature has not passed it.

Withholding Would Be Required in 2019
If enacted, employers would be required to begin withholding the payroll tax from wages earned on or after January 1, 2019. Though not yet numbered, the bill can be accessed online in a House or Senate packet.

Pay News Now will continue to monitor the status of the proposed payroll tax.