Alaska’s mineral tax policy must balance a fair share for the state while maintaining an attractive investment climate. A strong, responsible mining industry benefits Alaska through:
Despite Alaska’s world-class mineral reserves, only six large metal mines have been developed. High operational costs, geographic challenges, and lengthy permitting timelines make mine development more expensive here than in the Lower 48. To stay competitive, Alaska must ensure its tax policy encourages responsible investment.
Mining provides a stable revenue stream for state and local governments.
In 2023, the mining industry contributed $186 million to Alaska through:
The industry’s contributions extend beyond taxes, with millions spent on local jobs, contracts, and community investment.
All mines and royalty holders in Alaska, regardless of ownership or location, are subject to the state mining license tax. The large mines (net income greater than $100,000) pay the highest rate: 7% of net income. In 2023, the state received $52.5 million in AMLT revenue.
Mining corporations, like all corporations in Alaska, pay up to 9.4% in state corporate income tax, one of the highest rates in the U.S. In 2023, the industry contributed $5.8 million in corporate taxes.
Revenue payments to the state, beyond mining license and corporate taxes, depend on land ownership.
Alaska’s net income-based taxation system ensures that the state benefits from mining while recognizing the high costs of developing and operating mines in Alaska’s remote, harsh environments.
Alaska’s tax regulations are strictly prescriptive on what can be deducted in determining net income. Pre-production costs like exploration and permitting are not deductible—despite being essential for developing new mines and extending the life of existing operations.
A depletion allowance accounts for the gradual use of a mineral deposit—similar to how depreciation applies to equipment. Alaska’s depletion allowance mirrors the federal tax system, allowing mines to claim either cost depletion or percentage depletion (15% of gross income). According to the IRS, depletion acknowledges that natural resources are finite and that mining, drilling, and quarrying gradually use up an asset over time.
Mining contributes millions in property taxes each year to boroughs across Alaska, providing stable revenue for local governments. Unlike many other mining jurisdictions, Alaska allowslocal governments to impose additional, unpredictable taxes onmining, creating financial uncertainty for both operating and potential mines.
While property taxes provide an equitable, broad-based source of revenue, Alaska is one of the few places where local governments can impose additional mining-specific taxes, such as severance taxes. These taxes, which could be introduced at any time without limit, create serious business risks and make the state less competitive for mining investment.
Alaska’s net income-based taxation system ensures that the state benefits from mining while recognizing the high costs of developing and operating mines in Alaska’s remote, harsh environments.
For more than a decade, the Alaska Minerals Commission has recommended that local jurisdictions be precluded from imposing additional taxes on metal mines beyond property taxes. Without reform, the risk of sudden, excessive taxation threatens the longevity of existing mines and undermines the economic feasibility of future projects—jeopardizing both jobs and state revenue.
Alaska provides two targeted tax incentives to encourage mining development:
As a high-cost jurisdiction, these incentives can be critical to making projects economically feasible. Large mines require years—sometimes decades—to develop, with exploration, permitting, and pre-construction costs often reaching hundreds of millions or even billions of dollars.
New mines are exempt from the Alaska Mining License Tax (AMLT) for their first 3.5 years of operation. This recognizes the significant upfront costs required to bring a mine into production.
The exemption ensures that new mines can stabilize operations before becoming subject to full state tax obligations.
The Exploration Incentive Credit Program (AS 27.30.010-27.30.99) allows companies to deduct up to $20 million of pre-operational costs from AMLT and/or state royalty payments. While exploration costs for a large mine can total hundreds of millions of dollars, this credit provides some relief during the mine’s early years when it is still managing large capital costs.
Key Differences from Oil & Gas Credits:
Since pre-production exploration and permitting expenses cannot be deducted, this credit provides one of the only financial incentives for mineral exploration in Alaska.
Mining strengthens Alaska’s economy far beyond tax revenues. It creates thousands of jobs, supports local businesses, and contributes to community development. Many communities, hundreds of businesses, and thousands of Alaskan families rely on a healthy mining industry to thrive.
The Alaska Native Claims Settlement Act (ANCSA) ensures that the economic benefits of mining are shared among all Alaska Native Corporations.
Beyond its economic contributions, mining has helped develop essential infrastructure across the state:
Mining helps build long-term economic and infrastructure assets that benefit all Alaskans.
Mining is a net benefit to Alaska, generating far more revenue than it costs to manage the industry.
Over a four-year period (2016-2019), ISER’s study confirmed that the state consistently receives far more revenue from mining than it spends on regulation and oversight, making mining a valuable, self-sustaining contributor to Alaska’s economy.
Mining is unlike other industries due to long investment timelines, high capital costs, and dependence on global commodity prices. Large, modern mines require billions in upfront investment—often with no guarantee of long-term pricing stability.
Alaska’s current mineral taxation system is fair and comprehensive. Other than limiting local governments to broad-based property taxes, no major revisions are needed. Keeping existing mines strong and supporting new development will:
✔ Grow the taxpayer base
✔ Create more high-paying jobs
✔ Expand contracting opportunities for Alaskan businesses
✔ Increase contributions to state and local government revenue
✔ Support Alaska Native Corporations through revenue-sharing provisions
A balanced and competitive tax structure ensures that mining continues to benefit all Alaskans while keeping the state attractive for future investment.