Juneau, AK — Thursday, the Alaska House of Representatives narrowly defeated a controversial income tax on certain businesses that was slipped into the gasline bill. 

Alaska House Republicans remain steadfastly committed to the construction of a North Slope gasline, and members expressed outrage that the enabling legislation was transformed into a sweeping tax restructuring bill, which failed in a tie vote.

The defeated version of HB 381 included a new income tax targeting owners of S-corporations, LLCs, and sole proprietorships—entities described by legislators as the backbone of Alaska’s private sector.

“Supporting a gasline does not mean we should support every bill that claims to be a gasline bill,” said Rep. Kevin McCabe, R-Big Lake. “HB 381 became a Christmas tree for an income tax. Once the Legislature decides to cross this Rubicon, there is no going back. We cannot allow the government to reach inside nimble, private companies just because we feel a fiscal pinch.” 

Key reasons for the House Republican Caucus opposition include: 

Legislators characterized the S-corp tax as a parasite threatening the very project it was attached to by creating a massive new financial burden and economic uncertainty.

Members noted the tax would have penalized local oil and gas entities already working to produce energy for Alaskans, potentially disincentivizing production during a period of imminent energy shortfalls.

The bill would have created a tax structure with few rivals in the country, damaging Alaska’s reputation as a stable place for investment.

The conference committee report was released only hours before the vote, denying House members the opportunity to have the Department of Revenue testify on the complex new tax structure.

Rep. Sarah Vance, R-Homer, emphasized that the original goal was to grant tax relief to help get a state gasline. 

“The original intent of this bill was to provide property tax relief to create opportunity for reliable and affordable energy to Alaskans,” the Homer representative said. “ But instead what this bill does is it actually increases taxes on local oil and gas entities that are already producing in the state. My constituents have said, ‘Man, we need a gasline. We need affordable energy for Alaskans. But don’t swallow a bad bill.’”

“We can meet the urgency of this moment by passing a clean version of HB 381 without the S-corp tax,” said Rep. Dan Saddler, R-Chugiak/Eagle River. “That is the only way to allow the gasline to advance without gumming it up with a policy that harms private businesses.” 

House Republicans look forward to returning for the upcoming special session on July 27, 2026, to work toward a transparent, collaborative solution that prioritizes affordable energy without sacrificing the state’s economic foundation.