ANAPTYSBIO, INC Income Taxes Disclosure

12. Income Taxes

For the years ended December 31, 2025, 2024 and 2023, we recognized current state income tax provision of $164,000, income tax provision of $3,000, and income tax benefit of $4,000 respectively.

We have recorded a full valuation allowance against our net deferred tax assets due to the uncertainty surrounding the realization of such assets. Management has determined it more likely than not that the deferred tax assets are not realizable due to our historical loss position.

As of December 31, 2025, we had federal and state net operating loss carryforwards (“NOLs”), of $323.5 million and $69.8 million, respectively. The federal and state NOLs generated prior to 2018 will begin to expire in 2031 and 2028, respectively, unless previously utilized. The federal NOL includes $284.9 million of net operating losses generated in 2018 and after. Federal net operating losses generated in 2018 and after carryover indefinitely and may generally be used to offset up to 80% of future taxable income. As of December 31, 2025, we had federal and state research tax credit carryforwards of approximately $24.0 million and $21.1 million, respectively. The federal research tax credit carryforwards will begin to expire in 2041 and the state research tax credits will begin to expire in 2039.

The above NOL carryforward and the federal and state research tax credit carryforwards may be subject to an annual limitation under section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions if we experience one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period.

We experienced ownership changes as defined by Section 382 of the Code during 2007, 2017 and 2021. As a result, as of December 31, 2025, there are $154.1 million of federal NOLs available to offset taxable income in future years without Section 382 limitation, while $169.4 million of federal NOLs are subject to annual limitations over future periods. State NOL and credit carryforwards may be similarly limited.

Our use of federal and state NOLs and research credits could be further limited if we experience one or more ownership changes subsequent to December 31, 2025. If a change in ownership occurs, NOLs and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by ownership changes, if any, will not impact our effective tax rates.

We recognize a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more likely than not recognition at the effective date to be recognized. As of December 31, 2025 and 2024, we had no unrecognized tax benefits that, if recognized and realized, would affect the effective tax rate due to the valuation allowance against deferred tax assets. The following table summarizes the activity related to our unrecognized tax benefits:

If recognized, these amounts would not affect our effective tax rate, since they would be offset by an equal corresponding adjustment in the deferred tax asset valuation allowance.

Our policy is to recognize interest and penalties related to income tax matters in the provision for income taxes. As of December 31, 2025 and 2024, there were no interest or penalties on uncertain tax benefits.

We file income tax returns in the United States, California and various U.S. state jurisdictions. Due to our losses incurred, we are essentially subject to income tax examination by tax authorities from inception to date. Our Australian subsidiary was dissolved and the final Australian income tax return filed for the year ended December 31, 2024.

The One Big Beautiful Bill Act of 2025 ("OBBBA") was signed into law on July 4, 2025. The OBBBA makes changes to the U.S. corporate income tax including immediate expensing of domestic research and development costs while foreign expenditures will continue to be capitalized and amortized over 15 years and modifications to the timing of the deduction for interest expense.