Alaska Senate Majority Rewrites Governor's Revenue Bill, Removing Sales Tax

New version focuses on increasing taxes on oil and gas companies instead of a statewide sales tax

Published on Feb. 20, 2026

Got story updates? Submit your updates here. ›

The Alaska Senate Resources Committee has rewritten Gov. Mike Dunleavy's tax bill, replacing the governor's proposed statewide sales tax with provisions that would increase the tax burden on oil and gas companies and other corporations. The new version also eliminates Dunleavy's efforts to tie new revenue measures with new limits on state spending.

Why it matters

This rewrite of the governor's tax bill reflects the ongoing debate in Alaska over how to address the state's longstanding structural budget deficit. While the governor sought a broad-based sales tax, the Senate majority is focusing more on increasing taxes on the oil and gas industry, which has historically been a major source of state revenue.

The details

The new version of the bill includes several revenue-raising measures proposed by the Senate majority last year, such as reducing the maximum tax credits paid to oil companies, applying the state's corporate income taxes to privately held oil companies like Hilcorp, and imposing a new surcharge on oil companies using the Dalton Highway. The bill also maintains Dunleavy's proposal for a new minimum oil tax floor. Additionally, the new version includes a new head tax on Alaska workers to help fund the state's education system.

  • On January 23, 2025, Sens. Matt Claman, Cathy Giessel, and Bill Wielechowski listened to comments from Hilcorp Alaska's senior vice president Luke Saugier.
  • On Monday, February 17, 2026, the Senate Resources Committee adopted the new version of the tax bill.

The players

Mike Dunleavy

The current governor of Alaska who introduced the original tax bill that included a statewide sales tax.

Cathy Giessel

An Anchorage Republican who chairs the Senate Resources Committee and was involved in rewriting the governor's tax bill.

Bill Wielechowski

An Anchorage Democrat senator who said there are "some good components" in the new version of the bill but that Alaska's oil and gas tax structure may merit a more comprehensive review.

Bert Stedman

A Sitka Republican senator who co-chairs the Senate Finance Committee and said lawmakers "need to be careful that we don't derail our expansion" in Alaska's existing oil industry.

Hilcorp Alaska

A privately held oil company that operates the Prudhoe Bay oil field and does not currently pay corporate income tax as an S-corporation.

Got photos? Submit your photos here. ›

What they’re saying

“One of the key pieces the governor emphasized with this bill was balancing everyone contributing to the fiscal stability of the state. So that's what is endeavored with these changes.”

— Cathy Giessel, Chair, Senate Resources Committee (adn.com)

“We've been told repeatedly it's one of the most complex tax structures in the world. I think there needs to be a serious look at whether or not we just simplify it.”

— Bill Wielechowski, Senator (adn.com)

“A spending restriction? You know, we're having trouble funding basic services.”

— Cathy Giessel, Chair, Senate Resources Committee (adn.com)

What’s next

The new version of the tax bill is scheduled for another hearing in the Senate Resources Committee on Wednesday, February 19, 2026. Once it advances from that committee, it will head to the Senate Finance Committee.

The takeaway

This rewrite of the governor's tax bill reflects the ongoing debate in Alaska over how to address the state's budget deficit, with the Senate majority focusing more on increasing taxes on the oil and gas industry rather than a broad-based sales tax. The complex nature of Alaska's oil and gas tax structure remains a key issue that lawmakers may need to address more comprehensively.