Alaska Boroughs, Cities and the Unorganized Borough: Who Regulates Your Business

Most states organize local government around counties. Alaska does not. When you form a business here, the question is not only what the state requires. You also need to know which borough or city you are in, and whether that place taxes or licenses what you sell. The answer decides whether you owe Alaska borough sales tax, a hotel or bed tax, or a local business license, and it can change from one address to the next.

This guide explains how Alaska's local layers fit together, which rules come from the state and which come from local governments, and how to confirm the rules for your location.

Informational content only. This article is not legal or tax advice. Local tax rates, license requirements, and filing rules change and vary by place. Confirm current rules with the borough or city clerk and tax office, and talk to an attorney or CPA before you decide on entity structure, sales tax collection, or operating in more than one jurisdiction.

Alaska has no counties

Alaska's local government is built differently from most other states. Instead of counties, the state has three layers:

• Organized boroughs. There are 19. Each is a regional government with its own assembly, and each may levy taxes and set local rules. That is why the rules differ from one borough to the next.
• The Unorganized Borough. Everything outside the 19 organized boroughs falls here. Most of this area has no borough government at all.
• Cities. Incorporated cities exist both inside and outside boroughs. The Division of Community and Regional Affairs (DCRA) counted 145 cities in January 2025: 17 first class, 117 second class, and 11 home rule.

Two more facts help explain the map. First, the U.S. Census Bureau uses 11 census areas to tabulate data for the Unorganized Borough. These are a statistical proxy, not legal boundaries, so do not use them to decide which rules apply to you. Second, the Census lists about 149 incorporated places in Alaska, but only four have more than 10,000 people: Anchorage, Juneau, Fairbanks, and Wasilla. Most Alaska cities are small, and their tax and licensing rules vary widely.

Four places are unified municipalities, where the city and the borough are one government: Anchorage, Juneau, Sitka, and Wrangell. A business in one of these places deals with a single local government for both city and borough matters. Everywhere else, city and borough rules are separate and can overlap.

What the state requires everywhere

Some requirements apply in every part of Alaska, whether or not a borough or city has its own rules. Keep the state layer separate from the local layer when you plan.

• The state business license. Under AS 43.70, you must obtain a state business license before you engage in business activity in Alaska. It is issued by the Division of Corporations, Business and Professional Licensing within the Department of Commerce, Community, and Economic Development (DCCED). The fee is $50 per year for a new application (Form 08-4181), and renewal is also $50 per year (Form 08-4617). The only endorsement is the tobacco endorsement, which costs $100 per location, and telemedicine businesses must also register through the license. Occupations regulated under AS 08 also require a professional license.
• Forming an entity is a separate filing. Alaska has no Secretary of State. Business formation goes to the Corporations Section of the same division. Articles of Organization for a domestic LLC (Form 08-0484) cost $250, and Articles of Incorporation for a domestic business corporation (Form 08-0400) cost $250. The state business license is still required after you form the entity.
• Biennial reports. LLCs and corporations file a Biennial Report for $100 every two years, not every year. It is due January 2 of the filing year. An LLC formed in an even numbered year files in even numbered years, and an odd numbered year formation files in odd numbered years. An Initial Report with no fee is due within six months of formation. Late penalties apply after February 1.
• State taxes. Alaska has no state personal income tax and no statewide sales tax. It also has no franchise tax. An LLC taxed as a partnership or sole proprietorship owes no Alaska income tax on its earnings. An LLC that elects corporate taxation, or a corporation, files the Alaska corporate net income tax, which is graduated from 0% to 9.4%. The 0% rate applies to taxable income of $25,000 and below, and the 9.4% rate applies to taxable income of $222,000 and over. Confirm your filing details with the Department of Revenue, Tax Division at tax.alaska.gov.

Alaska borough sales tax: where it applies

This is the layer that surprises most new owners. Alaska has no statewide sales tax, but local governments can levy their own. The Department of Revenue reports that 107 municipalities levy local sales taxes, with rates ranging from 1% to 7%, and most fall between 2% and 5%. Because the tax is local, the rate and the rules depend on the place where the sale occurs. Two neighboring communities can face different rates and different filing requirements.

Do not assume an Alaska borough sales tax rate you read about applies to your business. Look up the rate and rules for the exact borough or city, then confirm them with that local tax office. A few examples show how much the answer changes:

• Kenai Peninsula Borough. The borough collects a 3% areawide sales tax. Cities inside the borough can add their own sales tax and license businesses, so a business in one of those cities may owe more than the borough rate.
• Matanuska-Susitna Borough. The borough repealed its borough business license on April 3, 2024. It still runs a bed tax, so a lodging business there still has a borough obligation even though the general license is gone.
• Fairbanks North Star Borough. The borough levies a room tax but no general sales tax. A business selling goods there does not collect borough sales tax under this structure, but a lodging business does collect the room tax. Confirm the room tax rate and filing schedule with the borough.

Local business licenses

A local general business license is separate from the state license, and it is not required everywhere. Some cities require one, and others do not. For example, Anchorage, Ketchikan, and Homer do not require a local general business license. Do not generalize from one city to another. Ask the city clerk whether your business needs one, what it costs, and when it must be renewed.

Place	Local sales tax	Bed or room tax	Local general business license
Anchorage (unified municipality)	Confirm with the Municipality of Anchorage	Confirm with the Municipality of Anchorage	Not required
Ketchikan	Confirm with the city	Confirm with the city	Not required
Homer	Confirm with the city	Confirm with the city	Not required
Kenai Peninsula Borough (areawide)	3% collected by the borough; cities add their own	Confirm with the borough	Cities license; confirm with each city
Matanuska-Susitna Borough	Confirm with the borough and city	Borough bed tax in effect; confirm rate	Borough license repealed April 3, 2024
Fairbanks North Star Borough	No general borough sales tax	Room tax; confirm rate	Confirm with the borough and city
Bethel or Nome (cities in the Unorganized Borough)	Cities can tax; confirm with the city	Confirm with the city	Cities can license; confirm with the city

The Unorganized Borough

Most of Alaska's land area lies in the Unorganized Borough, and most of it has no borough government. Without a borough government, there is generally no borough sales tax, bed tax, or borough business license to collect. That is the most common case, but it is not a safe assumption on its own.

Cities inside the Unorganized Borough can still license and tax. Bethel and Nome are examples of cities in this area with their own authority. The state business license applies everywhere in Alaska, including outside any city. Confirm whether your physical location is inside a city limit before you assume that no local rules apply.

How to find out which rules apply to you

Work through these steps in order. Each one narrows the local rules that apply to your location.

1. Identify the physical location of the business. Use the street address where you operate, sell, or store inventory. A mailing address, such as a post office box, can show a city name that does not match the city limits.
2. Determine the borough. Find out whether the location is inside one of the 19 organized boroughs or in the Unorganized Borough. Then determine whether it is inside an incorporated city. Remember that a unified municipality is both city and borough in one government.
3. Contact the local clerk and tax office. Ask three specific questions: Does the place levy sales tax or a bed tax, and at what rate? Does it require a local general business license? What registration is required before the first sale?
4. Confirm the state layer. Check your state business license and entity filing status through the Corporations Section at commerce.alaska.gov. For state tax questions, use tax.alaska.gov.
5. Get advising help if you need it. The Alaska Small Business Development Center (aksbdc.org) can help you work through the questions above. For legal or tax decisions, use an attorney or CPA.

Common mistakes to avoid

• Assuming one statewide rate. Alaska has no statewide sales tax, and the local rate depends on where the sale happens.
• Treating the state license as the only license. The state business license under AS 43.70 is required, but it does not replace a local license where a city requires one.
• Using census areas or federal district maps to decide local rules. Census areas are statistical proxies, and they do not establish government authority.
• Assuming a neighboring town has the same rules. Two places a few miles apart can have different sales tax, bed tax, and license requirements.
• Forgetting the biennial report. LLCs and corporations file every two years, due January 2, and late penalties begin after February 1.

Next steps

Start by confirming your physical location, then contact the borough or city clerk and tax office for that place. Get the state business license before you begin operating, and set a calendar reminder for your biennial report. If your business sells across several boroughs or cities, or operates in the Unorganized Borough, ask a qualified attorney or CPA to review your setup before you open for business.

This guide is informational only and is not legal or tax advice. Confirm every local rate, fee, and deadline with the agency that administers it before you rely on it.