By REP. KEVIN MCCABE
Alaskans, I’m proud to introduce HB 123, “An Act relating to vehicle rental taxes; relating to the issuance of subpoenas tied to tax records; and setting an effective date.”
This is a big step forward in how Alaska handles vehicle rental taxes, especially for those using online platforms such as Turo.
And at the heart of this bill is something simple but powerful: a tax cut for Alaskans.
Right now, the state imposes a 10% excise tax on passenger vehicle rentals, and that includes rentals through Turo. But here’s the kicker — Turo, unlike traditional rental car companies, doesn’t collect or remit this tax. Instead, it falls on individual car owners (the “hosts”) to handle it. Most of these folks aren’t tax experts; they’re just regular Alaskans looking to make a little extra cash. Because of this, there’s confusion, inconsistent enforcement, and a lot of hosts who don’t even know they owe anything.
Worse still, the state has gone after some hosts aggressively, garnishing their bank accounts to collect unpaid taxes. That’s not right, and it’s certainly not working. The system’s broken, and HB 123 is my attempt to fix it.
Here’s the good news: We’re dropping the vehicle rental tax from 10% to 9% for all passenger vehicle rentals. But that’s not all: Person-to-person car rentals will see a special cut, dropping from 10% to 7%. That’s real relief for both businesses and renters. For traditional rental car companies, this cut means they can invest in growing their business, hire more employees, or lower their prices. For everyday Alaskans looking to rent a car, this means more affordable options, whether you’re renting from a traditional company or through a company like Turo.
But HB 123 is more than just a tax cut. It’s about fairness and protecting Alaskans. For years, the state and Turo have been locked in a legal battle over whether person-to-person rentals should be subject to the 10% tax. The state argues that both Turo and its hosts should be collecting and remitting the tax, while Turo says, “Hold up, we’re not a rental company—we’re just a platform connecting people.”
This legal gray area has left hosts in limbo, trying to figure out their tax obligations on their own. Some have even been hit with back taxes they didn’t know they owed. That’s unfair, and it’s time to put an end to it.
Last year, Senate Bill 127 attempted to resolve this issue. It proposed a compromise—cutting the tax to 8%, allowing Turo to collect it, and wiping out retroactive penalties. The bill passed with bipartisan support, but Gov. Mike Dunleavy vetoed it, arguing that taxing a “new industry” wasn’t good policy.
The problem, however, was that the tax already existed. SB 127 just sought to make it fairer. And after the veto, we were left with the same mess. Turo still wasn’t collecting taxes like it does in other states.
That’s where HB 123 steps in. It provides a clean slate for Turo hosts — blocking the Department of Revenue from chasing back taxes on rentals that occurred before this bill takes effect. If you’ve already paid your taxes, you won’t face any new penalties.
We’re also making it easier to collect taxes. Platforms like Turo will only be responsible for collecting taxes if they’ve got the correct information from the hosts. And if they’ve made a good-faith effort to get that information, they’re off the hook. This streamlines the process and keeps red tape to a minimum. We’re even addressing local taxes, like Anchorage’s 8% rental tax. Turo hosts have been required to pay this tax since 2020, and this bill aligns state and local rules to make enforcement simpler and more consistent.
Bottom line: HB 123 cuts taxes for both traditional rental car businesses and Turo-type hosts, eases the burden on small businesses, and gives Alaskans the protection they deserve. It’s a fairer, simpler system that saves renters money, helps businesses grow, and puts this long-running Turo mess to rest. No more surprise back taxes or legal uncertainty hanging over the heads of Alaskans.
This is a win for Alaska. It makes car rentals more affordable, boosts competition, and helps locals who are working hard to make a living. It’s practical, it’s fair, and it’s built for the future of Alaska’s rental market.
That’s what I’m here to do—cut through the bureaucracy and deliver real results for you.
Rep. Kevin McCabe serves District 30 (formerly called District 8), the Big Lake area.
More affordable? How about simply eliminating the tax…now that’s more affordable.
Except we got road infrastructure to pay for. Pavement and stop lights are expensive.
When is this tax reduction going to start? For those of us who own a traditional car rental company need to know when the reduced tax rates will be in affect?