Humacyte, Inc. Income Taxes Disclosure
12. Income Taxes
The Company did not record any income tax expense or benefit during the years ended December 31, 2025 and 2024. The Company has a net operating loss and has provided a valuation allowance against net deferred tax assets due to uncertainties regarding the Company’s ability to realize these assets. The majority of losses before income taxes arose in the U.S.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and deferred tax liabilities, including valuation allowances, are as follows:
|
|
As of December 31, |
|
|||||
($ in thousands) |
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Net operating loss |
|
$ |
126,657 |
|
|
$ |
97,880 |
|
Capitalized research and development |
|
|
54,491 |
|
|
|
57,498 |
|
Research credits |
|
|
32,624 |
|
|
|
27,278 |
|
Stock-based compensation |
|
|
1,276 |
|
|
|
1,141 |
|
Inventory reserve |
|
|
1,905 |
|
|
|
— |
|
Right-of-use lease liability |
|
|
— |
|
|
|
127 |
|
Accrued expenses |
|
|
96 |
|
|
|
105 |
|
Other |
|
|
1 |
|
|
|
1 |
|
Total deferred tax asset |
|
|
217,050 |
|
|
|
184,030 |
|
Less: valuation allowance |
|
|
(216,288 |
) |
|
|
(182,867 |
) |
Total net deferred tax asset |
|
|
762 |
|
|
|
1,163 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Basis difference in fixed assets |
|
|
(762 |
) |
|
|
(1,041 |
) |
Right-of-use lease assets |
|
|
— |
|
|
|
(122 |
) |
Total deferred tax liability |
|
|
(762 |
) |
|
|
(1,163 |
) |
Total net deferred tax asset/(liability) |
|
$ |
— |
|
|
$ |
— |
|
For the years ended December 31, 2025 and 2024, the Company had no income taxes paid, net of refunds received.
A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that
sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income and the accumulated deficit, the Company provided a full valuation allowance against the deferred tax assets resulting from the tax loss and credits carried forward as of December 31, 2025 and December 31, 2024.
On November 18, 2021, North Carolina enacted the 2021 Appropriations Act, which included a gradual corporate income tax rate decrease from the current 2.5% to 0% by 2030. The Company is in a cumulative loss position and does not have significant deferred tax liabilities that can be utilized as a source of taxable income in the future. Therefore, the Company has reduced its North Carolina deferred tax assets, including the net operating losses, to zero, as no benefit is expected to be realized from these deferred tax assets prior to 2030 when there would be no income tax in North Carolina. If the Company becomes profitable prior to 2030, the Company will recognize an income tax benefit related to the portion of its North Carolina deferred tax assets utilized.
The reconciliation of the U.S. federal income tax provision at the statutory federal income tax rate of 21% for the year ended December 31, 2025, to our provision for income taxes was as follows:
|
|
|
|
|||||
|
|
Year Ended December 31, 2025 |
|
|||||
($ in thousands) |
|
Amount |
|
|
Rate |
|
||
Income tax benefit at statutory rate |
|
$ |
(8,575 |
) |
|
|
21.0 |
% |
State income taxes, net of federal benefit(a) |
|
|
376 |
|
|
|
(0.9 |
)% |
Research and development tax credits |
|
|
(5,346 |
) |
|
|
13.1 |
% |
Change in valuation allowance |
|
|
31,624 |
|
|
|
(77.4 |
)% |
Other nondeductible expenses: |
|
|
|
|
|
|
||
Stock compensation |
|
|
1,161 |
|
|
|
(2.8 |
)% |
Fair value adjustments |
|
|
(20,629 |
) |
|
|
50.5 |
% |
Other nondeductible expenses |
|
|
37 |
|
|
|
(0.1 |
)% |
Deferred tax adjustment |
|
|
1,352 |
|
|
|
(3.3 |
)% |
Provision for income taxes |
|
$ |
— |
|
|
|
0.0 |
% |
(a) State taxes in North Carolina made up the majority (greater than 50%) of the tax effect in the state and local income taxes, net of federal income tax effect category for 2025.
The reconciliation of the U.S. federal income tax provision for 2025 above reflects the adoption of ASU 2023-09, which was adopted prospectively for the year ended December 31, 2025. See Note 2, Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements for additional information on the adoption of ASU 2023-09.
The reconciliation of the U.S. federal income tax provision at the statutory federal income tax rate of 21% for the year ended December 31, 2024 to our provision for income taxes, as previously disclosed, prior to the adoption of ASU 2023-09, was as follows:
|
|
Year Ended December 31, 2024 |
|
|||||
($ in thousands) |
|
Amount |
|
|
Rate |
|
||
Income tax benefit at statutory rate |
|
$ |
(31,227 |
) |
|
|
21.0 |
% |
State income taxes, net of federal benefit |
|
|
(2,399 |
) |
|
|
1.6 |
% |
Tax credits |
|
|
(4,548 |
) |
|
|
3.1 |
% |
Other nondeductible expenses |
|
|
6,702 |
|
|
|
(4.5 |
)% |
Deferred rate changes |
|
|
2,256 |
|
|
|
(1.5 |
)% |
Deferred tax true-up(a) |
|
|
(1,973 |
) |
|
|
1.3 |
% |
Change in valuation allowance |
|
|
31,189 |
|
|
|
(21.0 |
)% |
Provision for income taxes |
|
$ |
— |
|
|
|
0.0 |
% |
(a) The deferred tax true-up for 2024 primarily relates to executive compensation subject to IRC Section 162(m) limitations.
The domestic and foreign components of pretax earnings from continuing operations for the year ended December 31, 2025 are as follows:
($ in thousands) |
|
Year Ended December 31, 2025 |
|
|
United States |
|
$ |
(40,833 |
) |
Foreign |
|
|
(1 |
) |
Total |
|
$ |
(40,834 |
) |
As of December 31, 2025 the Company had approximately $599.4 million and $614.8 million of gross Federal and state net operating losses, respectively. Of this amount, $438.2 million of Federal net operating losses are subject to an 80% limitation on taxable income, do not expire and will carry forward indefinitely, while the remaining amount begins to expire in 2026. Some of these state net operating losses included in these amounts follow the Federal Tax Cuts and Jobs Act and are carried over indefinitely. The Company’s state net operating losses began to expire in 2020 and will expire completely in 2045. The state operating loss carryforwards are inclusive of North Carolina net operating losses, which are recorded at a zero benefit.
As of December 31, 2025 and 2024, the Company had Federal and state research tax credit carryforwards of $32.6 million and $27.3 million, respectively. These credit carryforwards will begin to expire in 2026 and will expire completely in 2045.
Net operating loss carryforwards and tax credit carryforwards are subject to review and possible adjustment by the IRS, and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders or groups over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code, which could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not determined whether there have been any cumulative ownership changes or the impact on the utilization of the loss carryforwards if such changes have occurred. A section 382 study will be performed at a time when forthcoming profitability is reasonably anticipated.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law, which includes significant changes to U.S. tax law. The Company has evaluated the impact of OBBBA and determined that it does not have a material impact on the financial statements as of and for the year ended December 31, 2025 due to a full valuation allowance established against net deferred tax assets. The Company will continue to evaluate the potential impact of OBBBA on future periods.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Mar 28, 2024 | |
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.