Dave Inc./DE Income Taxes Disclosure

Note 18 Income Taxes

As of December 31, 2025, the Company had no federal net operating loss carryforwards and $70.7 million of combined state net operating loss (“NOL”) carryforwards available to offset future taxable income. The state NOLs begin to expire in 2032. We also had federal and state R&D tax credit carryforwards of $11.5 million and $3.1 million at December 31, 2025, respectively. The federal business tax credit carryforwards can be carried forward for 20 years and will expire between 2043 and 2045. The state R&D tax credit carryforwards do not expire. Internal Revenue Code Section 382 imposes limitations on the utilization of NOLs and credits in the event of certain changes in ownership of the Company. The Company completed a Section 382 ownership change analysis from inception through December 31, 2024. In addition, the Company monitors ownership changes of significant stockholders on an ongoing basis to assess whether an ownership change has occurred under Section 382. Based on these analyses, one ownership change occurred in 2017. However any annual limitations from the ownership change would not result in attribute carryforward limitations under Section 382. The realization of deferred tax assets is dependent upon future sources of taxable income. In making that assessment, the Company considers both positive and negative evidence in the various jurisdictions in which it operates related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company recorded a valuation allowance against the deferred tax assets, net of deferred tax liabilities, at December 31, 2024 of $58.7 million. Based upon management’s assessment of all available evidence at December 31, 2024, we concluded that it was more-likely-than-not that the deferred tax assets, net of deferred tax liabilities, will not be realized. As of December 31, 2025, based on all available positive and negative evidence, having demonstrated sustained profitability, which is objective and verifiable, and taking into account anticipated future earnings, the Company has concluded that it is more likely than not that its U.S. federal and state deferred tax assets will be realizable. As such, the Company released $58.7 million of the valuation allowance associated with the U.S. federal and state deferred tax assets during the year ended December 31, 2025.

As of December 31, 2025, the Company had $3.3 million of gross unrecognized tax benefits related to state income taxes and federal and state research and development tax credits. The unrecognized tax benefits of $3.3 million as of December 31, 2025, would, if recognized, affect the effective tax rate. Although it is possible that the amount of unrecognized tax benefits with respect to the uncertain tax positions will increase or decrease in the next 12 months, the Company does not expect material changes.

The Company recognized insignificant amounts of interest expense as a component of income tax expense during the years ended December 31, 2025 and 2024. The income tax related accrued interest amounts were also insignificant as of December 31, 2025 and 2024, respectively.

On June 27, 2025, California enacted legislation requiring financial institutions to utilize a single sales factor apportionment method, effective for tax years beginning in 2025. The new law decreased the Company's California apportioned income and state income tax expense in 2025 and was reflected in the Company's consolidated financial statements for the year ended December 31, 2025.

On July 4, 2025, new U.S. tax legislation H.R.1, known as the One Big Beautiful Bill Act ("OBBBA"), was enacted. The OBBBA introduces significant amendments to corporate taxation, including the modification of research and development (R&D) expense capitalization, additional limitations on interest expense deductions, and provisions for accelerated depreciation of fixed assets. During the third quarter of 2025, the Company completed its assessment of the OBBBA and elected to accelerate the amortization of its previously capitalized and unamortized U.S. research and development costs over a one-year period as permitted under the new legislation. As a result of the election, there was a corresponding decrease to the Company's deferred tax assets and income tax payable resulting from the restoration of full expensing of U.S. research and experimentation expenditures. The Company also does not expect any ongoing material impact to its effective tax rate as a result of the OBBBA.