GLAUKOS Corp Income Taxes Disclosure

Note 11. Income Taxes

Based on the weight of available evidence, the Company has established a valuation allowance for a portion of its deferred tax assets which it expects will not be realized on a more likely than not basis. The net increase in the valuation allowance was $64.1 million in 2025.

As of December 31, 2025, the Company had approximately $546.9 million, $455.1 million and $5.8 million of NOL carryforwards for federal, state and foreign purposes, respectively. Portions of federal NOL carryforwards incurred prior to 2018 will expire annually, if unused, while $346.9 million will not expire but can only be used to offset 80 percent of federal taxable income. Additionally, portions of state and foreign NOL carryforwards will expire annually, if unused.

As of December 31, 2025, the Company had federal and state R&D credit carryforwards of approximately $56.3 million and $33.0 million, respectively. Portions of federal and $5.9 million of state credits will expire annually, if unused, while $27.1 million of state credits carry forward indefinitely. Additionally, as of December 31, 2025, the Company had California economic development credit carryforwards of $3.0 million. These economic development credits can only be used to offset California taxable income and begin to expire in 2028, if unused.

Utilization of some NOL and tax credit carryforwards will be subject to annual limitations under IRC Section 382 and Section 383 due to several ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL, tax credit carryforwards, and other deferred tax assets that can be utilized to offset future taxable income and/or income tax liabilities. In general, ownership changes as defined by IRC Section 382 result from a greater than 50 percent change in the ownership of the Company’s stock among certain shareholders over a three‑year period.

As of December 31, 2025, approximately $2.1 million of unrecognized tax benefits would reduce the Company’s annual effective tax rate if recognized.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of its income tax provision. The accrued interest and penalties associated with uncertain tax positions as of December 31, 2025, December 31, 2024 and December 31, 2023 were not material.

Due to the Company’s NOL carryforwards, its U.S. income tax returns are open to examination by the Internal Revenue Service and other state taxing jurisdictions for years beginning in 2006.

There are no cumulative earnings in the Company’s foreign subsidiaries as of December 31, 2025 that would be subject to U.S. income tax or foreign withholding tax. The Company plans to indefinitely reinvest any future earnings of its foreign subsidiaries.

On July 4, 2025, House Resolution 1, commonly referred to as the One Big Beautiful Bill Act (OBBBA), was enacted into law. Key provisions of the OBBBA include the extension and modification of certain provisions of the Tax Cuts and Jobs Act of 2017, changes to bonus depreciation, adjustments to business interest expense limitations, and modifications to the treatment of research and development expenditures. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others becoming effective in 2026. In accordance with ASC 740, the effect of changes in tax rates and laws on deferred tax balances are recognized in the period when the legislation is enacted. The Company has reflected the effect of the OBBBA within the provision for income taxes and the deferred tax balances as of December 31, 2025. The OBBBA did not materially impact the Company's effective tax rate.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid by jurisdiction. The ASU is effective for public business entities’ annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this pronouncement on a prospective basis as of January 1, 2025.