Governor Walker called for a 4th Special Session beginning October 23 to focus on a bill proposing a payroll tax of 1.5 percent of wages earned by Alaskans and non-resident workers, capped at $2,200 or twice the previous year’s permanent fund dividend amount—whichever is higher. The proposal is expected to generate between $300 million and $325 million. About 15 percent of which is projected to come from non-resident workers. Under this proposal, Alaskans would pay the lowest taxes on a nationwide basis.
The proposed payroll tax would only apply to income that meets the federal definition of wages, retirement income such as Social Security benefits would not be taxed, and neither would money from Permanent Fund dividends, income from capital gains, or any form of government subsidy like unemployment benefits.