Health In Tech, Inc. Income Taxes Disclosure

7. Income Taxes

 

Income before income taxes consists of the following:

 

		Fiscal Year Ended December 31,
		2025				2024
Federal			1,674,172				889,990
Foreign			—				—
Income before income taxes			1,674,172				889,990

 

During the years ended December 31, 2025 and 2024, the Company incurred $395,330 and $218,523 of income tax expense, respectively.

 

The Company’s income tax provision consists of the following for the years ended December 31, 2025 and 2024:

 

		Fiscal Year Ended December 31,
		2025				2024
Current income tax expense (benefit)
Federal		$	(70,137	)		$	261,196
State			36,468				50,631
Total current income tax expense (benefit)		$	(33,669	)		$	311,827
Deferred income tax expense (benefit)
Federal			376,733				(82,620	)
State			52,266				(10,684	)
Total deferred income tax expense (benefit)		$	428,999			$	(93,304	)
Total income tax provision		$	395,330			$	218,523

 

Beginning in 2025 annual reporting, the Company adopted ASU 2023-09 on a prospective basis. The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax provision for the year ended December 31, 2025 after the adoption of ASU 2023-09:

 

		Fiscal Year Ended December 31, 2025
		Amount				Rate
Statutory federal income tax rate			351,576				21.0	%
State taxes (net of federal benefit)			63,778				3.8
Permanent difference			28,306				1.7
Return to provision true up			(56,699	)			(3.4	)
Deferred rate change			8,369				0.5
Effective tax rate			395,330				23.6	%

 

The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax provision for the year ended December 31, 2024 prior the adoption of ASU 2023-09:

 

		Fiscal Year Ended December 31, 2024
Statutory federal income tax rate			21.0	%
State taxes (net of federal benefit)			3.2
Permanent difference			0.7
Other			(0.3	)
Effective tax rate			24.6	%

The Company’s net deferred tax assets and liabilities consisted of the following as of December 31, 2025 and 2024:

 

		December 31,
		2025				2024
Deferred tax assets:
Net Operating Loss			388,182				—
Stock-based compensation			53,586				47,585
Bad debt allowance			91,828				—
Accrued liability			8,140				—
Gross deferred tax assets		$	541,736			$	47,585
Deferred tax liabilities:
Research and Development costs			(1,299,380	)			(376,261	)
ROU/Lease Liability			(31	)			—
Total deferred tax liabilities		$	(1,299,411	)		$	(376,261	)
Net deferred tax liabilities:		$	(757,675	)		$	(328,676	)

 

As of December 31, 2025, the Company had federal net operating loss carryforwards of $1,531,800, which may be carried forward indefinitely to offset future taxable income, but are subject to the 80% taxable income limitation upon utilization. Additionally, the Company had state net operating loss carryforwards of approximately $1.5 million as of December 31, 2025, which will begin to expire in 2045.

 

In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating loss carryforwards (“NOLs”) to offset future taxable income. As of December 31, 2025, the Company has not performed such an analysis evaluation the potential limitation of the Company’s net operating loss carryforwards due to the “Change in ownership” as defined under Section 382 of the Internal Revenue Code.

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include the return to immediate expensing of domestic research and experimental expenditures (“R&E”) which in some cases may include retroactive application back to 2021 for businesses with gross receipts of less than $31 million or accelerated tax deductions of R&E that was previously capitalized for larger businesses. The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent. Less favorable business provisions include limitations on tax deductions for charitable contributions. The OBBBA did not have a material impact on income tax benefit or expense or related tax assets or liabilities, as the Company does not have significant NOLs, interest expense or charitable contributions. The Company has reviewed the various elections available under the OBBBA for the treatment of domestic research and development expenses and plans to expense domestic research and development costs starting in 2025 along with accelerating the amortization of previously capitalized and unamortized research and development costs. The Company will not apply retroactive treatment to any prior tax periods.

 

The amounts of cash income taxes paid by the Company were as follows:

 

		Fiscal Year Ended December 31, 2025
Federal		$	711,000
State			119,726
Foreign			—
Total		$	830,726