One of the biggest bills impacting Alaska’s business sector this session is Senate Bill 280, which Governor Dunleavy originally introduced as a way to make investment in the Alaska LNG pipeline project more attractive to investors. However, the Legislature has amended the bill several times and the current draft (CSSB 280 version H) has transformed the bill from an investment driver to a State revenue driver.
According to a presentation by the State’s Chief Economist Dan Stickel, the bill “as introduced would materially decrease the cost of gas provided and make the project more attractive to investors.”
However, in the Senate Resources hearing yesterday, May 11, 2026, Stickel’s analysis showed “CSSB 280(RES) version H would result in a tax decrease initially, and a tax increase over life of project. It would not materially decrease the cost of gas provided or make the project more attractive to investors.”
The original bill that Dunleavy put forward provided tax breaks for qualifying properties that contribute significantly to the gasline project. Instead, it allowed municipalities and the State to collect an alternative volumetric tax (AVT).
The Legislature has since taken Dunleavy’s 7-page draft and transformed it into a 37-page tax restructuring that drives revenue for the State rather than drives investment.
The Department of Revenue provided the Senate Resources Committee with a numerical breakdown of State revenues from the LNG project under current tax law, under SB 280 as introduced, and under SB 280 version H.
Under current tax law, the cumulative cashflow would be $10.1 billion in 2042, $20.8 billion in 2052, and $29.7 billion in 2062. SB 280 as introduced reduces those numbers to $7.5 billion in 2042, $15.9 billion in 2052, and $22.5 billion in 2062. However, SB 280 version H increases the State’s revenue to $10.9 billion in 2042, $25.2 billion in 2052, and 40.2 billion in 2062.
Although the State refuses to lower its own revenues, version H does lower municipal revenues. Under current tax law, municipal revenues would be $6.3 billion in 2042, $11.9 billion in 2052, and $17.3 billion in 2062. SB 280 as introduced would decrease those numbers to $1.3 billion in 2042, $2.7 billion in 2052, and $4.0 billion in 2062. SB 280 version H also decreases municipal revenues from current tax law, but not as significantly as the original version. Version H’s municipal revenues would be $5.5 billion in 2042, $10.6 billion in 2052, and $16.9 billion in 2062.
Here is the math put simply:
| State Revenues | Revenue increase with SB 280 as introduced ($) | Revenue increase with SB 280 version H ($) |
| 2042 | -2.6 billion | 0.8 billion |
| 2052 | -4.9 billion | 4.4 billion |
| 2062 | -7.2 billion | 10.5 billion |
| Municipal Revenues | ||
| 2042 | -5 billion | -0.8 billion |
| 2052 | -9.2 billion | -1.3 billion |
| 2062 | -13.3 billion | -0.4 billion |
One of the significant ways the Legislature has changed the bill is the addition of an income tax on S-corporations related to the gasline project.
According to the sectional analysis on SB 280 version H, Section 24 of the bill “imposes a new corporate income tax on oil and gas pass-through entities with income from production, pipeline transportation, gas treatment, LNG processing, or marine transport of LNG in the state.” The bill excludes entities already subject to standard corporate income tax and exempts the portion of any qualified entity owned by the Alaska Gasline Development Corporation.
The current draft proposes a bracketed tax rate on “entire taxable income derived from sources in the state of every qualified entity.” For the purposes of this bill, “taxable income” is determined “under AS 43.20.144 as if the qualified entity were taxable as a C corporation.”
| Taxable income | Tax rate under SB 280 version H |
| Less than $1 million | 0 |
| $1-2 million | 5% |
| $2-3 million | 6% plus $50,000 |
| $3-4 million | 7% plus $110,000 |
| $4-5 million | 8% plus $180,000 |
| $5+ million | 9.4% plus $260,000 |
Democrats in the Legislature have been trying hard to push an income tax on pass-through entities this session. Senate Bill 92 and House Bill 350 were stand alone bills attempting similar taxes on pass-through entities. Both are stalled in committee. Now, the Democrats have saddled their tax objective to SB 280, completely transforming it from a bill intended to attract investment to a bill intended to put more money in the State coffers.
There are hearings on SB 280 scheduled every day this week. Public testimony is available tomorrow, Wednesday, May 13, at 9:00 a.m. in Senate Resources.
Must Read Alaska stands with the business community in opposition to SB 280 version H.
