GALECTIN THERAPEUTICS INCGALT

GALECTIN THERAPEUTICS INC Income Taxes Disclosure

10-KFiled Mar 31, 20262 min read
14.
Income Taxes
 
The components of the net deferred tax assets are as follows at December 31:
 
                 
    2025     2024  
    (in thousands)  
Operating loss carryforwards
  $ 69,301     $ 63,057  
Tax credit carryforwards
    9,016       9,010  
Other temporary differences
    17,349       18,276  
      95,666       90,343  
Less valuation allowance
    (95,666 )      (90,343 ) 
Net deferred tax asset
  $   —       $   —    
 
The primary factors affecting the Company’s income tax rates were as follows:
 
                             
    Year ended December 31,  
    2025     2024  
    Amount     
Percent
    Amount     
Percent
 
Tax benefit as U.S. statutory rates
  $ (6,224 )   (21.0 )%   $ (9,778 )   (21.0 )%
State income tax benefit
    (663 )   (2.2 )      (1,181 )   (2.5 ) 
Permanent differences
    145    0.5 %     74    0.1 %
Other
    (139 )   (0.5 )%     (1,880 )   (4.0 )%
Change in valuation allowance
    6,881    23.2 %     12,765    27.4 %
                             
Total effective income tax rate
  $ —       — %   $ —       — %
As of December 31, 2025, the Company has federal and state net operating loss carryforwards totaling $163,412,000 and $169,710,000, respectively, which will never expire as a result of the 2017 Tax Act. As of December 31, 2023, the Company has federal and state net operating loss carryforwards totaling $113,541,000 and $102,003,000 respectively, which expire through 2037. In addition, the Company has federal and state research and development credits of $7,781,000 and $1,235,000, respectively, which expire through 2042. Ownership changes, as defined by Section 382 of the Internal Revenue Code, may have limited the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income. Past and subsequent ownership changes could further affect the limitation in future years. Because of the Company’s limited operating history and its recorded losses, management has provided, in each of the last two years, a 100% valuation allowance against the Company’s net deferred tax assets.
 
The enactment of the One Big Beautiful Bill Act (“OBBBA”), including the continued capitalization and amortization requirements for Section 174 research and experimental expenditures, did not result in any state income tax liabilities or payments for the year; however, it impacted the composition of our federal net operating loss carryforwards as a portion of amounts previously deductible are now reflected as capitalized Section 174 costs.
 
The Company is subject to taxation in the U.S. and various states. Based on the history of net operating losses all jurisdictions and tax years are open for examination until the operating losses are utilized or the statute of limitations expires. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2025 and 2024, the Company does not have any significant uncertain tax positions.

Historical Timeline

Fiscal YearFiled
2025Mar 31, 2026Showing above
2024Mar 31, 2025
2023Mar 29, 2024
2022Mar 30, 2023
2021Mar 31, 2022
2020Mar 31, 2021
2019Mar 16, 2020
2018Mar 6, 2019
2017Mar 29, 2018
2016Mar 28, 2017
2015Mar 15, 2016

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.

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