Ketchikan, a thriving cruise port on Alaska’s southeast coast, will soon begin collecting a sales tax on items sold onboard cruise ships while the vessels are docked in the harbor.
The popular port in 2003 exempted cruise ships from having to fork over the 2.5% local tax, but on February 24, 2025, the Ketchikan Borough Assembly voted to rescind the exemption.
The new policy puts Ketchikan in line with other Alaska cruise ports that currently charge a sales tax, such as Juneau, Sitka, and Skagway.
By voting to approve the ordinance that reverses the 20-plus-year-old policy, the city expects to collect up to $300,000 per year from the sales tax.
Having the exemption in place meant that guests who bought goods from local, onshore merchants were paying a local sales tax, but those who purchased items on their ship did not. The reinstatement of the tax levels the playing field, supporters say.
The tax, which takes effect on April 1, 2025, officially suspends the exemption.
“Ordinance 2060 amends KGBC 4.50.230 (Exemptions) by removing subsection (y) which provides exemption [on] sales of goods which are transported into the borough on a cruise ship, which do not leave the cruise ship, and where the entire transaction, both payment and delivery, takes place on board a cruise ship,” states the Ketchikan Borough Assembly meeting agenda.
Back in 2003, when the exemption was approved, Ketchikan received about 800,000 cruise passengers per year. In 2024, the number was 1.5 million, meaning that implementing the sales tax is today a more lucrative undertaking.
Ketchikan’s sales tax rate of 2.5% is lower than that of others along the Alaskan coast. In Juneau, for instance, the sales tax collected from onboard purchases is 5% and there is an additional 3% tax on alcoholic beverages, the meeting agenda noted.
Some cruise lines that do not wish to be in competition with shoreside businesses or that do not choose to collect a local tax shut down their retail shops and restaurants while docked. Local merchants generally applaud such action, since it means cruisers will more likely buy food, souvenirs, and other goods from them.
The idea to reinstate the onboard sales tax came to light in January 2025, when the municipal Cooperative Relations Committee reviewed a staff report calling for the repeal of the 2003 policy. The report formed the basis of the ordinance that was just approved.
Sales Tax Revenue Will Join Passenger Wharfage Fee
The return of the cruise ship sales tax collection will add to Ketchikan’s cruise-tourism revenue stream, which already includes a cruise arrival head tax.
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Since 2021, the local government has charged an arrivals tax, which it calls a “passenger wharfage fee.” The charge originally was $9 per passenger on any cruise ship that docks at a city-owned or leased dock. The fee was raised to $11 per guest in 2024, and on April 1, 2025 it will rise again to $13.
Passengers who arrive in Ketchikan via tender, from ships anchored offshore, were charged a $6 fee when the policy was implemented in 2021. That fee was raised to $8 per guest in 2024, and on April 1, 2025, it rises to $10 per guest.
Other Alaska cruise destinations levy arrivals fees, too. Juneau charges $8 per guest, for example, while Haines charges $9.
Ketchikan is included on virtually all Alaska cruises. It is best known for hosting the Totem Heritage Center, which celebrates the artistry of the Tlingit, Haida, and Tsimshian native peoples.
The destination is also considered the salmon capital of the world since salmon spawn in Ketchikan Creek, which runs through the city.
