Updated: July 5, 2023
Being detached from the Continental 48, Alaska almost feels foreign to a lot of Americans who only associate the state with its namesake salmon and king crab. As an insider, you know full well that Alaska’s glaciers and fjords, not to mention the midnight sun in the summertime, can make it seem like heaven on earth. That’s why you started a small business here. Oh, and the fact that the state pays residents to live here instead of the other way around is certainly a nice cherry on top.
But the one thing that isn’t heavenly about owning a small business in Alaska is having to deal with payroll taxes. Luckily, that’s what we’re here for. Our nifty payroll calculator is here to the rescue. All you have to do is enter wage and W-4 information for each employee, and the calculator will take care of the rest.
Federal payroll taxes for Alaska employers
Regardless of whether your employee is paid on salary, hourly, or by other means, all federal payroll taxes are the same. To make things simple for you when you think about Uncle Sam, all you need to do is remember these six aspects of federal payroll taxes:
- Gross Wages:
- For all your hourly employees, multiply their hours worked by the pay rate. Don’t forget to increase the rate for any overtime hours.
- For all your salaried employees, divide each employee’s annual salary by the number of pay periods you have.
- Don’t forget to add in other forms of compensation, such as commissions, tips, or bonuses, into gross wages.
- Pre-tax withholdings. Subtract any eligible retirement savings account, Flexible Spending Account, Health Savings Account, and other pre-tax withholdings.
- Federal Income Tax. The biggest tax there is. Rates range from 0% to 37%. We won’t get into all the nitty-gritty details here. You can find all the tax bracket information you need on the IRS website.
- FICA taxes:
- Social Security Tax. Withhold and match 6.2% of each employee’s taxable wages until they have earned $160,200 (2023 tax year) for that calendar year. Any wages above $160,200 are exempt from the Social Security Tax.
- Medicare Tax. Withhold and match 1.45% of each employee’s taxable wages until they have earned $200,000 (2022 tax year). Once an employee has surpassed an annual earning of $200,000, he or she has to pay an additional 0.9% tax called…wait for it…Additional Medicare Tax (super original, we know). Fortunately for you, only employees are responsible for paying this tax.
- FUTA Unemployment Tax. Employees are not responsible for paying the FUTA tax, so this one is all on you. Employers have to pay 6% of the first $7,000 each employee earns per year. The good news is that you’re eligible to get a credit of up to 5.4%, making your effective FUTA tax rate 0.6% if you pay your state unemployment tax on time and in full. All the finer details on the FUTA credit reduction can be found in this video made in this video on the IRS website.
- Post-Tax Withholdings. This is the final deduction for any special responsibilities an employee may have, such as court-ordered wage garnishments and child support. Not many of your employees will have post-tax withholdings, but you still need to be on the lookout for them.
If you would like a more detailed explanation of federal payroll taxes, head on over to our step-by-step guide for additional information.
Alaska (AK) state payroll taxes for 2023
Nope, nothing to see here.
Did you know?
Workers’ compensation is mandated across most states, and it’s no different in Alaska. Learn how policies work, how this type of coverage protects employees from workplace injuries and illnesses, and what employers should know in our guide to Alaska workers’ compensation insurance.
Alaska state unemployment insurance
As an employer in Alaska, what you do have to pay is unemployment insurance to the state. The 2023 rates range from 1% to 5.4% on the first $47,100 in wages paid to each employee in a calendar year.
You will also have to withhold 0.51% on the first $47,100.00 in wages from each employee.
If you’re a new employer (congratulations on getting started!), your rate will generally be 1.31% to 1.86%. You can call (907) 465-2757 to find out what your rate will be.
Remember to pay in full and on time so that you can save 90% on your FUTA tax!
Write Those Paychecks!
It’s time to pay your employees! Now that all the numbers have been calculated, factoring in all deductions and withholding requirements, you can pay your employees the check they deserve. Make sure you’ve set aside any tax liabilities your company owes and you’ll be good to go!
Federal tax filings are due quarterly by filing Form 941. There’s also the Form 940 for FUTA annual filings. but for most Alaska employers, deposits must be made on an ongoing basis via the EFTPS payment system. You can find IRS employment tax due dates.
Additional AK payroll tax resources:
If you want to learn more about Alaska Payroll Taxes, we think you should check out the Department of Labor and Workforce Development website, particularly these two sections:
Or if you have any questions, call them at (907) 465-2757.
More helpful payroll calculators
Employers in Alaska can use the calculator at the top of this page to calculate gross pay, net pay, and deductions in just a few clicks (and feel confident when cutting paychecks). But occasionally, situations come up that call for a little bit more number crunching. For instance, do you sometimes reward high-performing employees with bonuses? Remember that these payments are considered supplemental wages in the eyes of the IRS (and subject to tax withholding). Furthermore, as employees come and go, you may need to figure out what their final paycheck will be. So, if you can use a little more help managing the math, check out some of the calculators listed below.