Blend Labs, Inc.BLND
Blend Labs, Inc. Income Taxes Disclosure
Income Taxes
The total provision for income taxes consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | 79 | 64 | 41 | ||||||||||||||
| Foreign | 170 | 11 | 87 | ||||||||||||||
| Total current | 249 | 75 | 128 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | — | 34 | (34) | ||||||||||||||
| Total deferred | — | 34 | (34) | ||||||||||||||
| Total provision for income taxes | $ | 249 | $ | 109 | $ | 94 | |||||||||||
The following table summarizes the differences between the income tax provision recorded by the Company and the amount computed by applying the statutory federal income tax rate of 21% to loss before income tax for the year ended December 31, 2025:
| 2025 | |||||||||||
Amount | Rate | ||||||||||
(in thousands) | |||||||||||
US federal statutory tax rate | $ | (185) | 21 | % | |||||||
State and local income taxes, net of federal income tax effect(1) | 79 | (9) | % | ||||||||
Foreign tax effects | |||||||||||
| India | 398 | (45) | % | ||||||||
Tax credits | — | — | % | ||||||||
Changes in valuation allowances | (2,820) | 321 | % | ||||||||
Nontaxable or nondeductible items | |||||||||||
Section 162(m) adjustment | 2,657 | (302) | % | ||||||||
Stock-based compensation | (2,248) | 256 | % | ||||||||
| Meals and entertainment | 45 | (5) | % | ||||||||
| Gifts | 19 | (2) | % | ||||||||
Other | 7 | (1) | % | ||||||||
Other reconciling items | |||||||||||
| Section 162(m) | 1,284 | (146) | % | ||||||||
| Stock-based compensation | 993 | (113) | % | ||||||||
| Other deferred adjustments | 163 | (19) | % | ||||||||
Deferred true-up | (142) | 16 | % | ||||||||
| Other reconciling items | (1) | — | % | ||||||||
| Total Tax Expense | $ | 249 | (28) | % | |||||||
(1) The only state and local jurisdiction that contributes to the majority (greater than 50%) of the tax effect in this category is Texas.
The following table summarizes the differences between the income tax provision recorded by the Company and the amount computed by applying the statutory federal income tax rate of 21% to loss before income tax for the years ended December 31, 2024 and 2023.
Year Ended December 31 | |||||||||||
| 2024 | 2023 | ||||||||||
| (in thousands) | |||||||||||
| Tax benefit at federal statutory rate | $ | (8,957) | $ | (35,151) | |||||||
| State income taxes, net of federal benefit | (127) | 481 | |||||||||
| Research and other credits | (2,771) | (3,774) | |||||||||
| Change in valuation allowance | 8,898 | 26,519 | |||||||||
| Section 162(m) adjustment | 4,830 | 2,836 | |||||||||
| Stock-based compensation | (2,009) | 9,380 | |||||||||
| Other | 245 | (197) | |||||||||
| Total provision for income taxes | $ | 109 | $ | 94 | |||||||
Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 156,822 | $ | 152,665 | |||||||
| Lease liabilities | — | 642 | |||||||||
| Research and other credits | 25,808 | 25,296 | |||||||||
| Accruals and reserves | 1,150 | 265 | |||||||||
| Interest expense limitation | 14,497 | 15,023 | |||||||||
| Stock-based compensation | 6,665 | 6,513 | |||||||||
| Fixed assets | 1,195 | 1,469 | |||||||||
| Capitalized research and development costs | 25,782 | 37,428 | |||||||||
| Other deferred tax assets | 28 | 100 | |||||||||
| Gross deferred tax assets | 231,947 | 239,401 | |||||||||
| Less: valuation allowance | (223,684) | (235,540) | |||||||||
| Total deferred tax assets | $ | 8,263 | $ | 3,861 | |||||||
| Deferred tax liabilities: | |||||||||||
| Right-of-use assets | $ | — | $ | (75) | |||||||
| Deferred contract costs | (1,303) | (1,016) | |||||||||
| ASC 606 adjustments | (3) | (3) | |||||||||
| Investments | (5,936) | (1,782) | |||||||||
| Other deferred tax liabilities | (383) | (240) | |||||||||
| Amortization | (638) | (745) | |||||||||
| Gross deferred tax liabilities | (8,263) | (3,861) | |||||||||
| Total net deferred tax assets | $ | — | $ | — | |||||||
As of December 31, 2025, the Company believes that, based on available evidence, both positive and negative, it is more likely than not that the net deferred tax assets will not be utilized.
As of December 31, 2025, the Company had a valuation allowance of $223.7 million. The valuation allowance decrease of $11.8 million during 2025 is primarily attributable to a decrease in deferred tax assets resulting from Section 174 cost amortization.
As of December 31, 2025, the Company had net operating loss (“NOL”) carryforwards for federal and state income tax purposes of approximately $636.3 million and $434.5 million, respectively, available to reduce future taxable income. The federal net operating losses generated before 2018 will begin to expire in 2028. The federal net operating losses generated in and after 2018 may be carried forward indefinitely. The state NOL carryforwards vary by state and begin to expire in 2026.
As of December 31, 2025, the Company had $25.7 million of federal research credit carryforwards which will begin to expire in 2033 and state research credit carryforwards of $14.1 million which have no expiration date.
Utilization of the net operating loss and tax credit carryforwards may be subject to annual limitations due to the ownership change limitation provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Events which may cause limitations in the amount of the NOLs that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Any annual limitations may result in the expiration of NOL and credits before they are able to be utilized.
As of December 31, 2025, the Company had $12.0 million of unrecognized tax benefits, none of which, if recognized, would impact the effective tax rate. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes. Interest and penalties were not significant during the years ended December 31, 2025, 2024 and 2023. The Company does not expect any material changes to its unrecognized tax benefits within the next twelve months.
The following table reflects the changes in the Company’s unrecognized tax benefits:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Beginning Balance | $ | 11,677 | $ | 10,040 | $ | 8,228 | |||||||||||
| Gross increases—tax positions in prior periods | 35 | 275 | 191 | ||||||||||||||
| Gross increases—tax positions in current periods | 240 | 1,362 | 1,621 | ||||||||||||||
| Ending balance | $ | 11,952 | $ | 11,677 | $ | 10,040 | |||||||||||
The Company files income tax returns in the U.S. federal, various state jurisdictions, and India. The Company is currently not under income tax examinations by the U.S. federal or state tax authorities.
In 2025, the Indian tax authorities concluded their examination of the Company’s 2022 tax year and issued an assessment. The Company has filed a formal appeal with the appropriate appellate authorities. As of December 31, 2025, management believes that its tax positions are well‑supported by the technical merits of the relevant tax law. Accordingly, under the more‑likely‑than‑not recognition threshold required by ASC 740‑10, the Company has determined that recognition of any tax liability is not warranted, and no provision for an uncertain tax position has been recorded. The Company is undergoing income tax examination in India for the 2023 tax year.
Since the Company has net operating losses and credits carried forward in federal and various state jurisdictions, certain items attributable to closed tax years are still subject to adjustment by applicable taxing authorities through an adjustment to tax attributes carried forward to open years. All tax returns will remain open for examination by the federal and most state taxing authorities for three years and four years, respectively, from the date of utilization of any net operating loss carryforwards or research and development credits.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 31, 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.