CSHB 189(W&M) - Education Tax Summary

• Imposes annual education tax on wages and net self-employment earnings for Alaska resident individuals and nonresidents/part-year residents with Alaska income sources.

• Tax is tiered by income level: $25/year for earnings under $30,000; $100/year for $30,000-$59,999; $200/year for $60,000-$89,999; $400/year for $90,000-$119,999; $600/year for $120,000 or more.

• Employers must withhold one-half of estimated tax from employee paychecks during the third and fourth payroll periods, with any remaining balance withheld from final payroll; employers face civil penalties up to five times unpaid taxes.

• Self-employed individuals must remit tax directly to the Department of Revenue; overpayments may be refunded if claimed within the following calendar year.

• Tax proceeds deposit to general fund and may be appropriated by legislature to public education fund; takes effect January 1, 2022.