Airsculpt Technologies, Inc.AIRS
Airsculpt Technologies, Inc. Income Taxes Disclosure
NOTE 8 – INCOME TAXES
The components of loss before income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows (in 000's):
| Fiscal Year Ended December 31, 2025 | Fiscal Year Ended December 31, 2024 | Fiscal Year Ended December 31, 2023 | |||||||||
| Domestic | $ | (11,473) | $ | (6,293) | $ | 5,145 | |||||
| Foreign | (6,165) | (1,537) | (1,908) | ||||||||
| Total | $ | (17,638) | $ | (7,830) | $ | 3,237 | |||||
Significant components of income tax expense were as follows (in 000’s):
| Fiscal Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Current | |||||||||||
| U.S. Federal | $ | (2) | $ | (81) | $ | 4,565 | |||||
| State and Local | (55) | 521 | 1,570 | ||||||||
| Total current income tax expense | (57) | 440 | 6,135 | ||||||||
| Deferred | |||||||||||
| U.S. Federal | (4,777) | (95) | 1,192 | ||||||||
| State and Local | (1,155) | (199) | 431 | ||||||||
| Foreign | 18 | 42 | (281) | ||||||||
| Total deferred income tax (benefit)/expense | (5,914) | (252) | 1,342 | ||||||||
| Total | $ | (5,971) | $ | 188 | $ | 7,477 | |||||
The effective tax rates for the fiscal years ended December 31, 2025, 2024 and 2023 were (33.8)%, (2.3)% and 249.4%. The most significant items impacting the effective tax rate during fiscal years 2025, 2024 and 2023 are non-deductible officer compensation expense and the items listed in the tables below.
The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025 (in 000's):
| Fiscal Year Ended December 31, 2025 | ||||||||
| Income tax expense/(benefit) computed at federal statutory rate | $ | (3,704) | 21.0 | % | ||||
State taxes, net of federal benefit (1) | (1,181) | 6.7 | % | |||||
| Foreign tax effects | ||||||||
| United Kingdom | ||||||||
| Statutory tax rate difference between UK and US | 125 | (0.7) | % | |||||
| Deferred tax write-offs | (958) | 5.4 | % | |||||
| Valuation allowance changes | 2,142 | (12.1) | % | |||||
Other foreign jurisdictions (2) | 4 | 0.00 | % | |||||
| Nontaxable or nondeductible items | ||||||||
| Worthless stock deduction | (2,422) | 13.7 | % | |||||
| Other permanent items | 156 | (0.9) | % | |||||
| Other reconciling items | (133) | 0.7 | % | |||||
| Total | $ | (5,971) | (33.8) | % | ||||
| (1) State and local taxes in California, Florida, and New York City made up the majority (greater than 50%) of the tax effect in this category. | ||
| (2) Includes Canada | ||
A reconciliation of income taxes computed at the U.S. federal statutory income tax rate of 21% to the Company's income tax benefit/(expense) was as follows (in 000's):
| Fiscal Year Ended December 31, | Fiscal Year Ended December 31, | |||||||||||||
| 2024 | 2023 | |||||||||||||
| At U.S. Federal statutory tax rate | $ | (1,710) | 21.0 | % | $ | 629 | 21.0 | % | ||||||
| State income taxes | 212 | (2.6) | % | 1,670 | 55.7 | % | ||||||||
| Nondeductible officer compensation | 1,381 | (17.0) | % | 4,769 | 159.1 | % | ||||||||
| Valuation allowance and other nondeductible expenses | 304 | (3.7) | % | 409 | 13.6 | % | ||||||||
| Total | $ | 188 | (2.3) | % | $ | 7,477 | 249.4 | % | ||||||
The Company’s deferred taxes consisted of the following (in 000’s):
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets | ||||||||
| Accrued liabilities | $ | 110 | $ | 39 | ||||
| Net operating losses | 2,950 | 1,368 | ||||||
| Operating lease liability | 7,185 | 7,181 | ||||||
| Equity-based compensation | 1,087 | 887 | ||||||
| 163 (j) limitation | 3,176 | 1,837 | ||||||
| State bonus depreciation | 705 | 735 | ||||||
| Other | 750 | 614 | ||||||
| Total deferred tax assets | 15,963 | 12,661 | ||||||
| Valuation allowance | — | (793) | ||||||
| Total deferred tax assets, net of valuation allowance | 15,963 | 11,868 | ||||||
| Deferred tax liabilities | ||||||||
| Property, plant, and equipment | (5,167) | (6,464) | ||||||
| Intangible assets | (5,574) | (4,722) | ||||||
| Right-of-use assets | (5,894) | (6,588) | ||||||
| Prepaid expenses and other current assets | — | (690) | ||||||
| Total deferred tax liabilities | (16,635) | (18,464) | ||||||
| Net deferred taxes | $ | (672) | $ | (6,596) | ||||
As of December 31, 2025, the Company had federal, state, and foreign net operating loss carryforwards in the amount of $9.6 million, $13.6 million, and $0.8 million, and $1.6 million, $0.9 million and $5.0 million, respectively. Certain losses have an indefinite carryforward period, while other loss carryforwards will expire in years 2039 through 2045.
The deferred tax asset related to foreign operations, $0.2 million, is recorded on the consolidated balance sheet as of December 31, 2025. Our deferred tax assets have been evaluated for realization based on historical taxable income, tax planning strategies, the expected timing of reversals of existing temporary differences and future taxable income anticipated. Our deferred tax assets are more likely than not to be realized in full due to the existence of sufficient taxable income of the appropriate character under the tax law. The valuation allowance was reduced in the current year by $(0.8) million as the related deferred tax asset for the foreign NOLs of $0.8 million was written off during the current year due to the closure of the London entity. Management recorded an increase of $0.8 million to the valuation allowance for the deferred tax assets related to the foreign net operating losses which are not more likely than not to be realized as of December 31, 2024.
We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025. The components of income taxes paid were as follows (in 000's):
| Fiscal Year Ended December 31, 2025 | |||||
| Federal | $ | (1,899) | |||
| Other State | 66 | ||||
| Foreign | — | ||||
| Income taxes paid, net of refunds | $ | (1,833) | |||
Cash paid for income taxes for the years ended December 31, 2024 and December 2023 was $1.8 million and $4.6 million, respectively.
Uncertain Tax Positions
ASC 740 prescribes a recognition threshold of more-likely-than not to be sustained upon examination as it relates to the accounting for uncertainty in income tax benefits recognized in an enterprise’s financial statements. The Company is subject to income taxation at the federal, foreign, and various state levels. The Company is no longer subject to U.S. federal
tax examinations for tax years before 2022, and with few exceptions, the Company is not subject to examination by foreign or state tax authorities for tax years which ended before 2022. Loss carryforwards and credit carryforwards generated or utilized in years earlier than 2022 are also subject to examination and adjustment.
As of December 31, 2025 and 2024, the Company had no uncertain tax positions.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 11, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.