Note 21. Income taxes

For financial reporting purposes, (loss) income before income taxes includes the following components:


		Twelve Months Ended						Six Months Ended
		December 31,						December 31,
(in USD thousands)		2025			2024			2023
United States		$	(195,445)		$	(26,630)		$	(26,024)
Foreign			(104,389)			469,176			31,811
Total		$	(299,834)		$	442,546		$	5,787

The components of the benefit (provision) for income taxes consists of:


		Twelve Months Ended						Six Months Ended
		December 31,						December 31,
(in USD thousands)		2025			2024			2023
Current
U.S. Federal		$	(2,208)		$	(1,134)		$	(424)
U.S. State			(910)			(126)			—
Foreign			306			(439)			—
Total current			(2,812)			(1,699)			(424)

Deferred
U.S. Federal		$	41,686		$	(95,436)		$	845
U.S. State			475			(475)			—
Foreign			12,487			(15,847)			—
Total deferred			54,648			(111,758)			845

Discontinued operations
U.S. Federal		$	—		$	—		$	—
U.S. State			—			—			—
Foreign			—			2,320			—
Total discontinued operations			—			2,320			—

Total income tax benefit (provision)		$	51,836		$	(111,137)		$	421

Upon adoption of ASU 2023-09, as described in Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements, the reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the twelve months ended December 31, 2025 was as follows:


	Twelve Months Ended
	December 31,
(in USD thousands, and in percentages)	2025
U.S. Federal Statutory Rate	$	62,965	21.0	%
State and Local Income Taxes, Net of Federal Income Tax Benefit ⁽¹⁾		(255)	(0.1)	%
Foreign Tax Effects
Canada
Federal statutory tax rate difference between Canada and United States		(6,263)	(2.1)	%
Non-taxable (non-deductible) portion of gains (losses) on digital assets		(9,240)	(3.1)	%
Changes in Valuation Allowances		(5,523)	(1.8)	%
Nontaxable item		3,398	1.1	%
Provincial taxes		8,410	2.8	%
Prior period adjustments		(1,485)	(0.5)	%
Other		1,574	0.5	%
Effect of Cross-Border Tax Laws
Subpart F Income Inclusion		13,724	4.6	%
Changes in Valuation Allowances		(8,301)	(2.8)	%
Nontaxable or Nondeductible Items
Nondeductible executive compensation		(10,230)	(3.4)	%
Non-cash asset contribution expense		(4,781)	(1.6)	%
Stock based compensation		3,352	1.1	%
Other		(1,620)	(0.5)	%
Outside basis in investments		5,620	1.9	%
Prior period adjustments		491	0.2	%
Effective tax rate	$	51,836	17.3	%

⁽¹⁾State taxes in Florida and Texas for 2025 made up the majority (greater than 50%) of the tax effect in this category.

The reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the twelve and six months ended December 31, 2024 and December 31, 2023, respectively, in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:


	Twelve Months Ended					Six Months Ended
	December 31,					December 31,
(in USD thousands, and in percentages)	2024					2023
Tax benefit (provision) computed at the federal statutory rate	$	(96,216)	21.0	%		$	(1,215)	21.0	%
State taxes, net of federal tax benefit		(596)	0.1	%			—	—	%
Permanent differences		26	(0.0)	%			(950)	16.4	%
Stock based compensation		681	(0.1)	%			(547)	9.5	%
Non-taxable portion of gains on digital assets		64,931	(14.2)	%			4,179	(72.2)	%
Foreign earnings taxed at a higher rate		(16,145)	3.5	%			(1,431)	24.7	%
Return to provision adjustments		1,043	(0.2)	%			—	—	%
Subpart F Income		(121,099)	26.4	%			—	—	%
Change in valuation allowance		56,380	(12.3)	%			385	(6.7)	%
Change in enacted tax rates		(132)	0.0	%			—	—	%
Other items		(10)	0.0	%			—	—	%
Effective tax rate	$	(111,137)	24.3	%		$	421	(7.3)	%

The following table summarizes the components of deferred tax assets and deferred tax liabilities:


		December 31,
(in thousands)		2025			2024
Deferred tax assets
Finance and operating lease obligation		$	50,008		$	11,521
Capital loan			2,726			555
Operating tax losses carried forward			132,352			44,446
Share issuance costs			—			1,197
Prepaid expense			—			1,294
Capital tax losses carried forward			8,429			6,713
Interest Carryforwards			22,012			14,413
Stock based compensation			5,070			3,915
Accrued expenses			3,890			3,343
Intangible assets, net			2,616			—
Goodwill			—			2,105
Property and equipment, net			36,812			34,999
Digital assets			26,430			—
Outside basis in investments			826			—
Total deferred tax assets		$	291,171		$	124,501

Deferred tax liabilities
Property and equipment, net			(102,976)			(15,397)
Operating lease right-of-use asset			(44,397)			(11,270)
Intangible assets, net			—			(875)
Equity in earnings of unconsolidated joint venture			(244)			(4,012)
Digital assets			(58,153)			(73,695)
Deferred Subpart F Income			(102,086)			(115,912)
Revaluation of Call Options			(7,442)			(699)
Revaluation of derivative asset			(7,718)			—
Outside basis in investments			(73,605)			—
Other			(101)			—
Total deferred tax liabilities		$	(396,722)		$	(221,860)

Valuation allowance			(24,303)			(13,755)

Total net deferred tax liability		$	(129,854)		$	(111,114)

Upon adoption of ASU 2023-09, as described in Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements, cash paid for income taxes, net of refunds, during the twelve months ended December 31, 2025 was as follows:


		Twelve Months Ended
		December 31,
		2025
(in USD thousands)
U.S. Federal		$	500
U.S. State:
Florida			(82)
New York			660
Texas			94
Other ⁽¹⁾			16
Total U.S. State			688
Foreign			—
Cash paid for income taxes (net of refunds)		$	1,188

⁽¹⁾The amount of income taxes paid during the year does not meet the 5% disaggregation threshold and is included in Other.

The Company intends to reinvest its foreign earnings in the jurisdictions in which they were earned and as such, has not provided for any additional taxes on approximately $5.5 million of unremitted earnings. The Company believes the unrecognized deferred tax liability related to these earnings is approximately $0.3 million.

The Company does not have any unrecognized tax benefits.

There are no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC 740, which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s Consolidated Financial Statements for the twelve months ended December 31, 2025 and 2024, and the six months ended December 31, 2023.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates on a calendar year basis. As of December 31, 2025, the Company had U.S. Federal net operating loss (“NOLs”) carryforwards of $523.6 million. These NOLs are carried over indefinitely but utilization is subject to an 80% taxable income limitation. As of December 31, 2025, the Company had U.S. Federal capital loss carryforwards of $29.1 million. These capital losses begin to expire in tax year 2027. The Company had post apportioned state NOL carryforwards of $71.4 million as of December 31, 2025, which will start to expire in 2040. The Company had foreign non-capital losses of $80.5 million that expire between 2033 and 2045. As of December 31, 2025, the Company had interest expense carryforward for U.S. income tax purposes of $70.2 million. The entire amount has an indefinite carryforward period. These carryforwards are available, subject to certain limitations, to offset future taxable income.

Valuation allowances are established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Based on the historical earnings of the Company’s operations, management believes it is more likely than not that some of the operations will not generate sufficient earnings to utilize these net operating losses and federal capital losses. As of December 31, 2025 and 2024, the Company has recorded valuation allowances of $24.3 million and $13.8 million, respectively. The net increase of $10.5 million is primarily attributable to valuation allowances recorded in American Bitcoin due to current year operating losses and lack of other sources of taxable income, and Far North JV divestiture from the Canada operations.

In the normal course of business, the Company is subject to examination by federal, state, and provincial jurisdictions, where applicable. As of December 31, 2025, tax years 2020 and beyond were subject to examination by the Internal Revenue Service, various state jurisdictions in which the Company is subject to tax, and the Canadian Revenue Agency.

As of December 31, 2025, there were no U.S. federal or state, or Canadian federal or provincial, income tax audits in progress for the Company.

Historical Timeline

Fiscal Year	Filed
2025	Feb 25, 2026	Showing above
2024	Mar 3, 2025

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.

Hut 8 Corp. Income Taxes Disclosure

Historical Timeline

About Income Taxes Disclosures

Other Available Disclosures