Education – AS 43.20.014, 43.55.019, 43.56.018, 43.65.018, 43.75.018, 43.77.045 – The Education Credit is a nontransferable and nonrefundable credit applicable to the corporate income tax, fisheries business tax, fishery resource landing tax, oil and gas production tax, oil and gas property tax, and mining license tax.
Taxpayers can claim a credit for contributions to Alaska universities and accredited nonprofit Alaska two- or four-year colleges for facilities, direct instruction, research and educational support purposes.
The tax credit can also be taken for donations to a school district or state-operated vocational technical education and training school for vocational education courses, programs and facilities. Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership also qualify. Contributions to the Alaska Higher Education Investment Fund established in 2012 qualify as well.
The credit was set to end Dec. 31, 2018, but the Alaska Legislature in 2018 made changes to the law, and extended the credit to Dec. 31, 2024.
Before Jan. 1, 2019, the credit is only for cash contributions. As of Jan. 1, 2019, the credit will be for contributions of cash or equipment.
Before the year 2019, the credit allows the deduction of 50% of a business’s annual contributions up to $100,000, 100% of the next $200,000 in donations, then 50% of donations above $300,000. A business, for example, is able to have $250,000 deducted from its taxes by paying $300,000 in donations. A business is allowed to claim up to $5 million in Education Credits per year across all eligible tax types.
As of Jan. 1, 2019, the deduction amounts and cap will be reduced. The credit, including the contribution categories eligible for the credit, will remain the same as before 2019, with two exceptions. First, the contributions between $100,000 and $300,000 – those contributions will allow a deduction of 75% of the contribution, not 100% like before 2019. Second, a business will be allowed to claim up to $1 million in education credits per year across eligible tax types, not up to $5 million like before 2019.
On Jan. 1, 2021, the credit will be further reduced to 50% of all contributions. A business will still be allowed to claim up to $1 million in education credits per year across eligible tax types.
Qualifying Education Tax Credits include contributions by taxpayers to a public or private nonprofit elementary or secondary school in the state, a nonprofit regional training center recognized by the Alaska Department of Labor and Workforce Development, or an apprenticeship program in the state that is registered with the U.S. Department of Labor under 29 U.S.C. 50-50b for direct instruction, research and educational support purposes.
In addition, tax credits for certain taxpayers are available for contributions accepted for a facility by a public or private nonprofit elementary or secondary school in the state, for a scholarship awarded by a nonprofit organization to a dual-credit student for certain educational expenses, for a residential school in the state approved by the Alaska Department of Education and Early Development, or certain qualified childhood early learning and development programs.
Tax credits are also available for contributions by certain taxpayers for science, technology, engineering and math (STEM) programs by a nonprofit agency or school district for school staff and for students in grades kindergarten through 12 in the state and for the operation of a nonprofit organization dedicated to providing educational opportunities that foster public service leadership for future generations of residents of the state.
Film Production Credit – AS 43.98.030, AS 21.09.210, AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, AS 43.65, AS 43.75 and AS 43.77 – The Film Production Tax Credit under the Department of Revenue was effective July 1, 2013, and the Alaska Legislature repealed it July 1, 2015. The department stopped accepting new projects on the date it was repealed. It was a transferable credit for expenditures on eligible film production activities in Alaska. The film credits have six-year expiration dates to be used against Alaska tax liabilities; therefore, the department could see credits being taken until 2023 since credits were still being awarded in 2016.
Gas Exploration and Development – A taxpayer may take a corporate income tax credit for 25% of qualifying expenditures incurred in exploration and development of natural gas reserves in Alaska, except for the North Slope. The credit may be applied against 75% of the tax liability.
LNG Storage Facility Tax Credit – AS 43.20.047 – The LNG (Liquefied Natural Gas) Storage Facility Tax Credit is a nontransferable, refundable credit for the costs incurred to establish a storage facility for LNG. The credit is for 50% of the costs incurred, not to exceed $15 million. The credit applies to facilities with a minimum storage capacity of 25,000 gallons of LNG that are public utilities regulated by the Regulatory Commission of Alaska. A facility must have been placed into service after Jan. 1, 2011, and start commercial operations before Jan. 1, 2020. The credit is refundable, subject to AS 43.55.028.
Minerals Exploration Incentive – AS 27.30.030 – The credit is for 100% of eligible costs of mineral and coal exploration activities, and is applicable to the corporate income tax, mining license tax and mineral production royalty. The credit may not exceed $20 million and must be applied within 15 years after the credit is approved.
For corporate income tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of the total corporate income tax liability.
For the mining license tax, the credit is limited to the lesser of 50% of the mining license tax liability at the mining operation where the exploration occurred or 50% of total mining license tax liability.
For the mineral royalty, the credit is limited to 50% of the royalty liability from the mining operation where the exploration activity occurred.
Qualified In-State Oil Refinery Infrastructure Expenditures Tax Credit – AS 43.20.053 – The In-State Refinery Tax Credit began on Jan. 1, 2015, and is a credit for qualified infrastructure expenditures for in-state oil refineries incurred after Dec. 31, 2014, and before Jan. 1, 2020. The credit may not exceed 40% of total qualifying expenditures or $10 million per tax year per refinery, whichever amount is less. The credit can be applied against corporate income tax liability and carried forward for up to five years. It is also a refundable credit. The authorizing statute will sunset on Dec. 31, 2019.
Qualified Oil and Gas Service Industry Expenditure Credit – AS 43.20.049 – A taxpayer may claim a credit for 10% of qualified oil and gas service industry expenditures that are for in-state manufacture or in-state modification of oil and gas tangible personal property. The credit, which may be up to $10 million, is applied to corporate income tax liabilities. The credit is not transferable, but an unused credit may be carried forward for five years. If the taxpayer takes the credit, the taxpayer may not deduct the expenditures.
Urea/Ammonia/Gas-to-Liquid Facility Credit – AS 43.20.052 – This credit allows an in-state company that produces urea, ammonia, or gas-to-liquids products to apply a credit to its corporate income tax based on natural gas purchased from state leases. The credit is equal to the amount of state royalty paid on natural gas purchased for the qualifying project.
The credit is not transferable or eligible for state purchase, it cannot be carried forward to future years, and it cannot be used to reduce a tax liability below zero. The credit is scheduled to be repealed on Jan. 1, 2024.
Veteran Employment Tax Credit – AS 43.20.048 – This credit is for corporate income taxpayers who employ qualified veterans in the state. The credit is $3,000 for hiring a disabled veteran, and $2,000 for a veteran who is not disabled, for at least 1,560 hours during 12 consecutive months after the employment date. For seasonal employment, the credit is $1,000 for hiring a veteran for at least 500 hours during the three consecutive months after the employment date.