Employer's Guide to Unemployment Insurance in Alaska

Everything employers need to know about paying unemployment insurance taxes in Alaska.

If your small business has employees working in Alaska, you’ll need to pay Alaska unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In Alaska, state UI tax is one of the primary taxes that employers must pay. However, other important employer taxes, not covered here, include federal UI and withholding taxes.

Different states have different rules and rates for UI taxes. Here are the basic rules for Alaska’s UI tax.

Note: Unlike most other states, where UI tax is paid only by the employer, in Alaska employees pay a share of the tax, and it is the employer’s responsibility to withhold the employee’s share. Also, Alaska often refers to Employment Security Tax (EST) rather than unemployment insurance tax.

Register With the Department of Labor

As an Alaska employer, your small business must establish an Alaska UI tax account with the Alaska Department of Labor (AKDOL). You can register for an account with AKDOL either online or on paper. Once registered, you’ll be issued an employer account number.

To register online, use the MyAlaska website (click on the Employment Security Tax link). To register on paper, use Form TREG, Alaska Employer Registration Form. Blank forms are available for download from the Forms and Publications section of the AKDOL website. There is no fee to register your business with AKDOL.

Note: To establish your Alaska UI tax account, you’ll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.

Rules for UI Tax Liability

Unlike other states, Alaska does not have a minimum amount of wages that must be paid before an employer is liable for UI tax. Instead, typical employers will be liable simply if they have an employee for some portion of a day during a calendar year. In addition, a typical business will be liable if it acquires another business, or acquires substantially all the operating assets of another business, if that other business was a liable employer at the time of purchase.

For purposes of comparison, under the Federal Unemployment Tax Act (FUTA), typical for-profit employers are liable for FUTA taxes if, during the current or preceding calendar year, they either:

  • paid wages of $1,500 or more in any calendar quarter, or
  • had one or more employees at any time in each of twenty calendar weeks.

Different rules, not covered here, apply to agricultural workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.

One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.

Wage Base and Tax Rates

UI tax is paid on each employee’s wages up to a maximum annual amount. That amount, known as the taxable wage base, increases every year in Alaska. The amount is 75% of the average annual wage in Alaska.

The state’s UI tax rates for new employers also change every year in Alaska. As a new employer, your Alaska UI tax rate will depend on what kind of business you’re in—or, more technically, what “industry” you’re in. Industry categories are based on the North American Industry Classification System (NAICS). The NAICS was created by the federal government to classify and analyze statistics for different kinds of businesses. Alaska, however, uses tax rates related to each of these kinds of businesses to assign UI tax rates to new employers.

In recent years, rates for new employers generally have ranged between approximately 1.8% and 2.5%. Established employers are subject to a lower or higher rate than new employers depending on an “experience rating.” This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.

File Quarterly UI Tax Reports and Payments

In Alaska, UI tax reports and payments are due by the last day of the month following the end of the calendar quarter. In other words:

For the Quarter Ending:

Report and Payment are Due:

March 31

April 30

June 30

July 31

September 30

October 31

December 31

January 31

Most employers can file reports and payments online or on paper. Larger employers (50 or more employees) must file online. To file reports online, use the MyAlaska website. You can also pay online at the same website using Electronic Funds Transfer (EFT). To file on paper, use Form TQ01C, Quarterly Contribution Report. Each quarter, AKDOL mails contribution reports to all active employers. You also can download blank forms from Forms and Publications section of the AKDOL website. Include payment checks with your paper report.

Quarterly reports are due for each quarter as long as your UI tax account is open, even if you paid no wages during the quarter. You should enter zeros in the lines for reportable and taxable wages and amount remitted, certify and date the report and submit it on time. You will be subject to a penalty if you fail to file.

Post a Notice (Poster)

You are required to post a notice (poster) regarding state unemployment claims in a conspicuous place for all employees. The poster provides employees with basic information on what unemployment insurance is, who pays UI taxes (both the employee and the employer), who qualifies for benefits, and how to file an unemployment claim. You can download a notice that meets all legal requirements (Form 07-1012, Notice to Employees) from the Employment-Related Posters section of the AKDOL website.

Do Not Misclassify Employees as Independent Contractors

Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it’s important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.

Using Payroll Service Companies

You may decide that it’s easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.

Additional Information

This article touches on only the most basic elements of Alaska UI taxes (also known as employment security tax). Avoid possible penalties for making mistakes by checking both the IRS and AKDOL websites for the latest information. AKDOL also publishes an Alaska Unemployment Insurance Tax Handbook that you can download from the AKDOL website. In addition to state UI tax, employers have other responsibilities not covered in this article, such as federal UI and withholding taxes, required reporting of new hires, and required retention of employee records. You can get more information about other small business tax issues in other articles here on Nolo.

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