Envirotech Vehicles, Inc. Income Taxes Disclosure
5. Income Taxes
The cumulative estimated net operating loss (“NOL”) carry-forward is $73,591,129 and $50,713,781 at December 31, 2025 and 2024, respectively. Of this amount as of December 31, 2025, $59,213,790 of this NOL may be carried forward indefinitely while $14,377,339 is subject to expiration over a 20-year period. Due to the enactment of the Tax Cuts and Jobs Act of 2017, the corporate tax rate for those tax years beginning with 2018 has been reduced to 21%. Therefore, the cumulative tax effect of the NOL carryforward at the expected rate of 21% comprising the Company’s net deferred tax amount is as follows:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Tax effected net operating loss | $ | 5,095,383 | $ | 1,439,226 | ||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | 10,649,894 | 9,210,668 | ||||||
| Research and development tax credit carryforward | 274,891 | 274,891 | ||||||
| Sub-total | 16,020,168 | 10,924,785 | ||||||
| Valuation allowance | (16,020,168 | ) | (10,924,785 | ) | ||||
| Net deferred tax asset | $ | — | $ | — | ||||
| Cumulative NOL | $ | 73,591,129 | $ | 50,713,781 | ||||
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryover for federal income tax reporting purposes are subject to annual limitations. The net operating loss carry-forward includes the years 2012 through 2022 for the Envirotech Vehicles, Inc losses, and includes the years 2014 through 2020 for EVT, as the 2021 EVT loss is included in the consolidated Envirotech Vehicles, Inc. loss. Because a change in ownership occurred as a result of the Company’s acquisition of EVT pursuant to a merger of a wholly owned subsidiary of the Company with and into EVT, with EVT surviving the merger as a wholly-owned subsidiary of the Company, net operating loss carryover will be limited as to use in future years. Federal tax returns for tax years since are still open for examination by the Internal Revenue Service.
The following table reconciles the Federal statutory rate to the Company's effective tax rate.
| 2025 | 2024 | |||||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||||
| U.S. Federal statutory rate | $ | 8,216,667 | 21 | % | $ | 1,858,285 | 21 | % | ||||||||
| Valuation allowance | (8,216,667 | ) | (21 | )% | (1,858,285 | ) | (21 | )% | ||||||||
| Total | $ | - | 0 | % | $ | - | 0 | % | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 13, 2026 | Showing above |
| 2024 | Apr 15, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Sep 25, 2023 | |
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.