AK SB3005

Creates Alaska's first state income tax on individuals, trusts, and estates with rates starting at 2.75% for 2023, increasing to 3.75% by 2026 and thereafter; trustees and partnerships must file returns and withhold taxes from nonresident partners.

Establishes tax on resident individuals (those receiving permanent fund dividends, domiciled in state, or receiving state-specific tax benefits) and nonresident individuals on income derived from Alaska sources including wages, business income, real property sales, and investment activities.

Provides credits for income taxes paid to other states and allows a permanent fund dividend to offset Alaska income tax liability, with specific provisions for trusts, estates, and partnerships including exemptions for special needs trusts and certain nonresident trusts.

Incorporates federal income tax definitions and rules by reference while allowing state-specific modifications; establishes withholding requirements for employers and partnerships with regulations to be adopted by the Department of Revenue.

Takes effect January 1, 2023, with application to income received on or after that date; applies progressive rates based on filing status and year.