Doximity, Inc.DOCS
Doximity, Inc. Income Taxes Disclosure
Income Taxes
Substantially all of the Company’s income before income taxes was generated in the United States for the fiscal years ended March 31, 2026, 2025, and 2024.
The Company’s provision for income taxes consisted of the following (in thousands):
| Fiscal Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Current provision: | |||||||||||||||||
| Federal | $ | 13,448 | $ | 42,259 | $ | 36,394 | |||||||||||
| State | 6,581 | 9,722 | 9,819 | ||||||||||||||
Foreign | 1,787 | — | — | ||||||||||||||
| Total | 21,816 | 51,981 | 46,213 | ||||||||||||||
| Deferred provision (benefit): | |||||||||||||||||
| Federal | 28,707 | (9,606) | (5,088) | ||||||||||||||
| State | 3,431 | (1,986) | (3,505) | ||||||||||||||
Foreign | — | — | — | ||||||||||||||
| Total | 32,138 | (11,592) | (8,593) | ||||||||||||||
| Total provision for income taxes | $ | 53,954 | $ | 40,389 | $ | 37,620 | |||||||||||
The following is a reconciliation of the income tax expense at the federal statutory tax rate to the Company’s provision for income taxes, prepared in accordance with ASU 2023-09 for the fiscal year ended March 31, 2026 (in thousands, except percentages):
Fiscal Year Ended March 31, 2026 | |||||||||||
| Income taxes at statutory rate | $ | 52,443 | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect (1) | 8,528 | 3.4 | % | ||||||||
Foreign tax effects | 1,787 | 0.7 | % | ||||||||
| Tax credits | |||||||||||
| Research and development tax credits | (3,663) | (1.5) | % | ||||||||
| Investment tax credits | (843) | (0.3) | % | ||||||||
| Change in valuation allowance | (39) | — | % | ||||||||
Nontaxable or nondeductible items | |||||||||||
| Section 162(m) limitation | 7,711 | 3.1 | % | ||||||||
| Stock-based compensation | (12,405) | (5.0) | % | ||||||||
| Other | 487 | 0.2 | % | ||||||||
Changes in unrecognized tax benefits | (52) | — | % | ||||||||
Total | $ | 53,954 | 21.6 | % | |||||||
(1) The tax effect in this category primarily reflects state taxes in New York, California, Pennsylvania, Illinois, New Jersey, and Tennessee, and local taxes in New York City.
The following is a reconciliation of the income tax expense at the federal statutory tax rate to the Company’s provision for income taxes in accordance with required disclosures prior to the Company’s adoption of ASU 2023-09 for the years ended March 31, 2025 and 2024 (in thousands):
Fiscal Year Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Income taxes at statutory rate | $ | 55,350 | $ | 38,893 | |||||||
| State income taxes, net of federal benefit | 12,831 | 12,130 | |||||||||
| Research and development credits | (6,439) | (3,817) | |||||||||
| Stock-based compensation | (37,634) | (6,734) | |||||||||
| Change in valuation allowance | 25 | (4,060) | |||||||||
| Section 162(m) limitation | 19,872 | 3,410 | |||||||||
| Transferable federal tax credits | (1,305) | (1,920) | |||||||||
| Other | (2,311) | (282) | |||||||||
| Total provision for income taxes | $ | 40,389 | $ | 37,620 | |||||||
Cash paid for income taxes, net of refunds received, for the year ended March 31, 2026 is as follows (in thousands):
| Fiscal Year Ended March 31, 2026 | |||||
US Federal | $ | 16,571 | |||
US State | 5,262 | ||||
Foreign | (19) | ||||
Cash paid for income taxes, net of refunds received | $ | 21,814 | |||
Components of deferred tax assets and liabilities were as follows (in thousands):
| As of March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accruals and deferred revenue | $ | 3,295 | $ | 4,784 | |||||||
| Net operating loss carryforwards | 862 | 944 | |||||||||
| Research & development credit carryforwards | 8,028 | 5,117 | |||||||||
Investment tax credits | 8,272 | 4,600 | |||||||||
| Operating lease liabilities | 2,574 | 3,122 | |||||||||
| Acquisition and other related expense | 225 | 248 | |||||||||
| Stock-based compensation expense | 9,420 | 5,236 | |||||||||
| Capitalized research and development | 8,715 | 44,558 | |||||||||
| Gross deferred tax assets | 41,391 | 68,609 | |||||||||
| Less: valuation allowance | (1,273) | (1,200) | |||||||||
| Deferred tax assets, net of valuation allowance | 40,118 | 67,409 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | (4,501) | (3,308) | |||||||||
| Operating lease right-of-use assets | (1,805) | (2,238) | |||||||||
| Intangible assets | (1,819) | (1,404) | |||||||||
Unrealized gain | (9) | (445) | |||||||||
| Deferred tax liabilities | (8,134) | (7,395) | |||||||||
| Net deferred tax assets | $ | 31,984 | $ | 60,014 | |||||||
The Company monitors the realizability of deferred tax assets, taking into account all relevant factors at each reporting period. As of March 31, 2026, the Company had a valuation allowance of $1.3 million, which related to Arizona research and development credits and capital loss carryforwards. As of March 31, 2025, the Company had a valuation allowance of $1.2 million, which related to Arizona research and development credits, California alternative minimum tax credits, and capital loss carryforwards.
Pursuant to provisions under the Inflation Reduction Act, the Company purchased $17.9 million of transferable federal tax credits during the fiscal year ended March 31, 2026, from various counterparties. In connection with the purchase, the Company paid $13.8 million for tax credits related to fiscal year ended March 31, 2026, and $2.8 million for tax credits related to fiscal year ended March 31, 2025, which were purchased at negotiated discounts, resulting in an income tax benefit of $1.1 million recorded during the fiscal year ended March 31, 2026.
As of March 31, 2026, the Company had net operating loss, or NOL, carryforwards for state tax purposes of $3.7 million. Portions of the NOL carryforwards will expire at various dates beginning in the tax year ending March 31, 2042. As of March 31, 2026, the Company had research and development tax credit carryforwards for federal tax purposes of $4.9 million for state tax purposes of $9.5 million. The Federal research and development tax credit carryforward expires in the year ending March 31, 2046. The California state research and development tax credit carryforwards do not expire. The other state research and development tax credit carryforwards will expire at various dates beginning in the year ending March 31, 2034. Based on an assessment of the Company’s historical ownership changes through March 31, 2026, the Company does not anticipate a current limitation on the tax attributes.
As of March 31, 2026 and 2025, the Company had unrecognized tax benefits, or UTBs, of $13.6 million and $12.0 million, respectively. If realized, $13.3 million would impact the effective tax rate while the remainder would reduce deferred tax assets subject to a full valuation allowance.
A reconciliation of the beginning and ending balances for gross UTBs is as follows (in thousands):
| Fiscal Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Beginning balance | $ | 11,989 | $ | 9,302 | $ | 7,913 | |||||||||||
| Additions for tax positions related to the current year | 1,844 | 2,502 | 1,404 | ||||||||||||||
| Additions for tax positions related to prior years | 11 | 194 | 112 | ||||||||||||||
| Reductions for tax positions related to prior years | (257) | (4) | (119) | ||||||||||||||
| Reductions related to a lapse of statute | — | (5) | (8) | ||||||||||||||
| Ending balance | $ | 13,587 | $ | 11,989 | $ | 9,302 | |||||||||||
Interest and penalties were not material during the fiscal years ended March 31, 2026, 2025, and 2024.
In July 2025, Congress passed and the President signed into law H.R. 1, the One Big Beautiful Bill Act ("Tax Act") which addresses certain business tax provisions enacted as a part of the 2017 Tax Cuts and Jobs Act including restoration of Section 174 expensing for US-based research. Accounting Standards Codification Topic 740, Income Taxes, (“Topic 740”) requires the tax impacts to be included in the reporting period that includes the date the Tax Act was signed into law. The impacts of the Tax Act are reflected in our results for the fiscal quarter ended March 31, 2026, and there was no material impact to our income tax expense or effective tax rate. Management elected to accelerate the deduction of all remaining unamortized domestic R&D expenses originally capitalized in fiscal years 2023 through 2025 in one year—i.e., in fiscal year 2026. The net deductions benefit increased the Company’s March 31, 2026 prepaid taxes and decreased our deferred tax assets by approximately $35.3 million.
The Company files income tax returns in the U.S. federal and various state jurisdictions. With limited exceptions, all tax years after 2021 remain subject to examination.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 19, 2026 | Showing above |
| 2025 | May 20, 2025 | |
| 2024 | May 23, 2024 | |
| 2023 | May 26, 2023 | |
| 2022 | May 27, 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.