Tax incentive evaluation ratings

Rating: Making progress

Key points:

  • Alaska is making progress because the state has adopted a plan for regular evaluation of tax incentives.
  • The first evaluations, published in 2015, have already helped shape legislative conversations about incentives.
  • Selectively studying major incentives in greater depth might lead to more detailed evaluations.

Alaska evaluation law

Year enacted: 2014.a

Who evaluates: Legislative Finance Division.

Length of review cycle: Six years.

For more information on state ratings, please visit our interactive map.  

In 2014, Alaska approved a law that requires evaluation of tax incentives on a six-year cycle. Under the law, the Department of Revenue works with other state agencies to report basic information on each incentive, including a description of the program, its goals, and its cost. Nonpartisan analysts in the Legislative Finance Division then use that information to assess whether the programs achieved their goals and to make policy recommendations.b

One strength of Alaska’s law is how the review schedule is organized based on the administering agencies for the incentives. For example, the Legislative Finance Division studied every incentive administered by the Department of Commerce, Community, and Economic Development in 2015.c This approach ensures that lawmakers have information on similar programs in the same year, which helps them compare the results of incentives to one another.

The evaluations are already helping to shape conversations about incentives. For example, based on its evaluations, Legislative Finance recommended that lawmakers end some programs. Legislation to do that passed the Alaska House in 2015, but the Senate did not approve the bill.d

Alaska could improve the evaluation process by analyzing the state’s largest incentives in more depth. Under the law, state officials are not only reviewing economic development tax incentives, but also studying hundreds of other “indirect expenditures,” including tax credits, tax deductions, tax exemptions, and fee waivers—everything from fuel tax exemptions for charities to programs that allow seniors to receive free fishing licenses.e As a result, Legislative Finance reviewed more than 100 indirect expenditures in 2015. The report provided only limited rationales for its recommendations and generally did not include analysis of the economic impact of the programs.f

Producing detailed analysis of every indirect expenditure would be a herculean task. Other states have set priorities in their evaluation process to help deal with this challenge. Like Alaska, both Maine and Washington have evaluation laws that apply to hundreds of tax credits, exemptions, and deductions. In both states, some provisions receive full evaluations with detailed quantitative analysis, while others receive “expedited” reviews that rely more on descriptive information.g In 2016, Washington also exempted from evaluation dozens of tax preferences that the state determined were consistent with basic principles of tax policy such as avoiding double taxation.h Selectively studying major tax incentives in more depth would allow Alaska lawmakers to have the information they need to improve these programs.


  1. Alaska Stat. § 24.20.235,
  2. Ibid.
  3. Alaska Legislative Finance Division, “Indirect Expenditure Report” (January 2015),
  4. Alaska H.B. 155 (2015),
  5. Alaska Stat. § 43.05.095,
  6. Alaska Legislative Finance Division, “Indirect Expenditure Report.”
  7. Maine Rev. Stat. tit. 3, § 999 to 1000,; Washington Rev. Code Ann. § 43.136.045,
  8. Washington Joint Legislative Audit and Review Committee, Issue Papers #1 and #3 (April 2016), meetingmaterials/April2016/JLARCStaffIssuePapers.

Spotlight on Mental Health

State tax incentives
State tax incentives

Improving Tax Incentives for Jobs and Growth

A national assessment of evaluation practices

Quick View

Tax incentives—including credits, exemptions, and deductions—are one of the primary tools that states use to try to create jobs, attract new businesses, and strengthen their economies. Incentives are also major budget commitments, collectively costing states billions of dollars a year. Given this importance, policymakers across the country increasingly are demanding high-quality information on the results of tax incentives.

Composite image of modern city network communication concept

Learn the Basics of Broadband from Our Limited Series

Sign up for our four-week email course on Broadband Basics

Quick View

How does broadband internet reach our homes, phones, and tablets? What kind of infrastructure connects us all together? What are the major barriers to broadband access for American communities?

Pills illustration
Pills illustration

What Is Antibiotic Resistance—and How Can We Fight It?

Sign up for our four-week email series The Race Against Resistance.

Quick View

Antibiotic-resistant bacteria, also known as “superbugs,” are a major threat to modern medicine. But how does resistance work, and what can we do to slow the spread? Read personal stories, expert accounts, and more for the answers to those questions in our four-week email series: Slowing Superbugs.

Explore Pew’s new and improved
Fiscal 50 interactive

Your state's stats are more accessible than ever with our new and improved Fiscal 50 interactive:

  • Maps, trends, and customizable charts
  • 50-state rankings
  • Analysis of what it all means
  • Shareable graphics and downloadable data
  • Proven fiscal policy strategies


Welcome to the new Fiscal 50

Key changes include:

  • State pages that help you keep track of trends in your home state and provide national and regional context.
  • Interactive indicator pages with highly customizable and shareable data visualizations.
  • A Budget Threads feature that offers Pew’s read on the latest state fiscal news.

Learn more about the new and improved Fiscal 50.