Juneau — The Alaska Legislature passed House Bill 123, a significant reform that updates the state’s vehicle rental tax system to better reflect the modern economy. This legislation reduces tax rates and clarifies responsibilities, providing relief to Alaskans and supporting small business owners.
HB 123 lowers the vehicle rental tax from 10% to 9% for traditional rentals and introduces a 7% rate for rentals arranged through peer-to-peer platforms like Turo and Getaround. This adjustment acknowledges the evolving nature of the rental market and ensures a fairer tax structure for all participants.
“This bill is a win for Alaskans,” said Representative Kevin McCabe (R-Big Lake), the bill’s sponsor. “It simplifies our tax code, supports local entrepreneurs, and ensures that everyone pays their fair share without overburdening small businesses.”
In addition to rate adjustments, HB 123 mandates that vehicle rental platforms with over 200 transactions in the previous year collect and remit taxes directly to the Department of Revenue. This streamlines tax collection and provides clarity for both the state and platform users.
Most importantly, the bill includes provisions that protect Alaskans from retroactive tax assessments on rentals conducted before the bill’s effective date, offering peace of mind to those who have participated in the peer-to-peer rental market.
HB 123 represents a thoughtful approach to tax policy, modernizing outdated systems, promoting fairness, and fostering economic growth.
The bill now goes to the Governor for his signature and passage into law.