EverQuote, Inc. Income Taxes Disclosure

9. Income Taxes

The One Big Beautiful Bill Act (“OBBBA”) was signed into law on July 4, 2025, which, among other provisions, permanently repeals the requirement to capitalize domestic research expenditures for federal income tax purposes for taxable years beginning after December 31, 2024, and allows for the accelerated deduction of any remaining unamortized domestic research expenditures over one or two years. Foreign research expenditures are still required to be capitalized and amortized ratably over 15 years. The impacts of the OBBBA are reflected in the Company’s income tax benefit for the year ended December 31, 2025.

As of December 31, 2025, the Company had federal net operating loss carryforwards of $52.9 million to offset future taxable income, which do not expire but are limited in their usage to an annual deduction equal to 80% of annual taxable income. As of December 31, 2025, the Company had state net operating loss carryforwards of $75.9 million, which may be available to offset future taxable income and expire at various dates beginning in 2027. As of December 31, 2025, the Company also had federal and state research and development tax credit carryforwards of $11.0 million and $5.2 million, respectively, which may be available to reduce future tax liabilities and expire at various dates beginning in 2039 and 2032, respectively.

Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 and Section 383 of the Internal Revenue Code ("IRC") of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. The Company has completed analyses through December 31, 2024 and determined that the Company did not undergo an ownership change within the meaning of Sections 382 and 383 during the analysis periods. The Company does not believe an ownership change within the meaning of Sections 382 and 383 has occurred through December 31, 2025. Therefore, the Company does not believe that its operating losses and research and development tax credit carryforwards are limited or that any of its carryforwards would expire unused.

The Company evaluates the positive and negative evidence bearing upon its ability to realize the deferred tax assets including its cumulative historical results and estimated future taxable income or loss. The Company had previously maintained a valuation allowance against its federal and state deferred tax assets as of December 31, 2024. During the fourth quarter of 2025, the Company concluded that, based on sustained improvements in the Company’s profitability, it is more likely than not that the Company will be able to fully realize its net deferred tax assets. The Company therefore released its valuation allowance of $48.5 million. The Company’s judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to the Company’s income tax provision in the period of change. The decrease in the valuation allowance for deferred tax assets during the year ended December 31, 2024 related primarily to the use of net operating loss carryforwards to offset taxable income, partially offset by an increase in capitalized research and development costs. The increase in the valuation allowance for deferred tax assets during the year ended December 31, 2023 related primarily to increases in net operating losses and capitalized research and development costs under IRC Section 174.

The Company assesses the uncertainty in its income tax positions to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon the ultimate settlement with the relevant taxing authority. No reserve for uncertain tax positions or related interest and penalties has been recorded at December 31, 2025 and 2024.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and foreign jurisdictions, where applicable. In October 2024, the Company received notice of examination by the Internal Revenue Service for the year ending December 31, 2022. The examination was completed during the year ended December 31, 2025 with no adjustments proposed. The Company has not received notice of examination by any other jurisdictions for any other tax year open under statute. The Company is open to future tax examination under statute from 2022 to the present. However, carryforward attributes that were generated prior to January 1, 2022 may still be adjusted upon examination by federal, state or local tax authorities if they either have been or will be used in a future period.

The Company adopted ASU 2023-09 on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 regarding income taxes paid (net of refunds received) for the year ended December 31, 2025 (in thousands):