The contact characteristics of Ti/Al and Ti/Al/Ni/Au contacts to as-grown, plasma etched and plasma etched + annealed in N2 n-Al0.5Ga0.5N epilayers were compared. After a rapid thermal annealing, both Ti/Al and Ti/Al/Ni/Au contacts to as-grown and plasma etched + annealed in N2 n-Al0.5Ga0.5N became truly Ohmic, whereas the contacts to plasma etched samples still remained rectifying. Surface atomic concentration analysis indicates the N vacancies resulting from plasma treatment act more as deep-level states rather than shallow donors. However, these deep-level states could be effectively removed by annealing the plasma etched n-Al0.5Ga0.5N under N2 ambient, and as a result, the Fermi level was elevated toward conduction band edge, facilitating the formation of Ohmic contacts.