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The 2024 Alaska Use Tax

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2024 Alaska state use tax

The AK use tax only applies to certain purchases

The Alaska use tax is a special excise tax assessed on property purchased for use in Alaska in a jurisdiction where a lower (or no) sales tax was collected on the purchase.

The Alaska use tax should be paid for items bought tax-free over the internet, bought while traveling, or transported into Alaska from a state with a lower sales tax rate.

The Alaska use tax rate is 0%, the same as the regular Alaska sales tax. Including local taxes, the Alaska use tax can be as high as 7.000%.

What exactly is the Alaska use tax?

The Alaska Use Tax is a little-known tax that complements the regular Alaska sales tax to ensure that purchases made outside of Alaska are not exempt from the Alaska sales tax.

Instead of taxing the sale of tangible property which takes place outside of Alaska's jurisdiction (and thus cannot be taxed), the Alaska Use Tax taxes the use or consumption of tangible property bought in other jurisdictions with a lower sales tax rate and brought back into Alaska.

How Do I Calculate How Much Use Tax I Owe?

If you made any purchases online or outside of Alaska for which you paid less then Alaska's 0% in sales tax, you are responsible for paying Alaska a use tax on those purchases equal to 0% of the total purchase price less any sales taxes already paid to other jurisductions.

Example 1: If $100 worth of books is purchased from an online retailer and no sales tax is collected, the buyer would become liable to pay Alaska a total of $100 × 0% = $0.00 in use tax.

Example 2: If a $10,000 boat is purchased tax-free and then brought into a jurisdiction with a -2% sales tax rate, the buyer would become liable to pay Alaska a total of (0% - -2%) × $10,000 = $0.00 in use tax.

Example 3: If $1,000 worth of goods are purchased in a jurisdiction with a 1% sales tax rate, no use tax is owed to Alaska because the foreign jurisdiction's sales tax rate is greater then or equal to Alaska's 0% sales tax.

How do I pay the Alaska use tax?

In many states, an optional field for remitting use tax is included in the state income tax return. A use tax return form may also be available on the Alaska Department of Revenue website for calculating and paying use tax.

Above: Example use tax field on a state income tax return

Use tax is a self-assessed tax with a very low public awareness rate, and as a result states have a very hard time enforcing use tax compliance. Only about 1.6% of taxpayers pay use tax each year, remitting an average of $69 in use taxes on total purchases averaging $929. ^[1]

Government studies have shown that a large percentage of use tax payments are made as the result of an audit or under the threat of an audit. If unpaid use tax is discovered by a Alaska tax audit, significant underpayment fees and interest may apply.