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Alaska Legislature

Juneau wrap-up, part 4: Lawmakers tighten business tax credit for donations to schools

The Alaska Legislature passed dozens of bills in its final week in Juneau — including more than 20 on its last day alone.

The barrage of votes ran for more than 10 hours in both the House and Senate, making it difficult to keep track.

Now that the dust has settled on the session, we're looking back at some of the last-minute legislation you may have missed. Over the course of the week, we're examining bills that could affect Alaskans' day-to-day lives — where they smoke and drink, when they go to the doctor and how they pay for clean-energy upgrades like solar panels.

The Alaska Airlines Center at University of Alaska Anchorage. (Loren Holmes / ADN)

A popular Alaska tax credit allowing generous deductions for corporate donations to schools was set to expire in December.

Lawmakers, on the last day of the legislative session, kept the program alive, but not before tightening its provisions through House Bill 233, sponsored by Anchorage Democratic Rep. Chris Tuck.

The credit, used by dozens of businesses, can be claimed against corporate income taxes as well as certain fishing, insurance, mining and oil taxes.

It allows the deduction of half of business's annual donations up to $100,000, 100 percent of the next $200,000 in donations, then 50 percent of donations above $300,000. In other words, businesses could deduct $250,000 from their taxes in exchange for $300,000 in donations.

The program cost the state $6.3 million in taxes last year in exchange for $9.2 million in contributions, with the university system collecting $2.9 million and Alaska Pacific University receiving $1.6 million. It drew endorsements during the legislative process from Native corporations, mining companies and Northrim Bank, which said it donated $300,000 in 2015, $400,000 in 2016 and $355,000 in 2017.

House Bill 233, which was rewritten by the Senate, ratchets down the deduction, starting in 2021, to 50 percent for donations between $100,000 and $300,000, instead of 100 percent. It also will bar businesses from claiming more than $1 million in education tax credits each year, down from a current limit of $5 million.

The measure is projected to ultimately bring the state $2 million more in tax revenue each year than if lawmakers simply kept the credit in place unchanged.

In a separate move, lawmakers also approved legislation to create a raffle to benefit education in which Alaskans can use their Permanent Fund dividends, in $100 increments, to buy tickets. The plan, backed by $25,000 for advertising and promotion in the state capital budget, was an idea of Sen. Click Bishop, R-Fairbanks.

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