Ibotta, Inc.IBTA
Ibotta, Inc. Income Taxes Disclosure
Income Taxes
The provision for (benefit from) income taxes consists of the following (in thousands):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current taxes: | |||||||||||||||||
| Federal | 799 | 2,688 | 2,419 | ||||||||||||||
| State | 2,327 | 6,688 | 3,515 | ||||||||||||||
| Total current taxes | 3,126 | 9,376 | 5,934 | ||||||||||||||
| Deferred taxes: | |||||||||||||||||
| Federal | 3,087 | (41,331) | — | ||||||||||||||
| State | 59 | (12,291) | — | ||||||||||||||
| Total deferred taxes | 3,146 | (53,622) | — | ||||||||||||||
Provision for (benefit from) income taxes | $ | 6,272 | $ | (44,246) | $ | 5,934 | |||||||||||
A reconciliation of the provision for income taxes to the amount computed by applying the 21.0% U.S. federal income tax rate to income before income taxes for years after the adoption of ASU 2023-09 is as follows (in thousands, except percentages):
| Year ended December 31, 2025 | |||||||||||
| Amount | % | ||||||||||
| U.S. federal statutory income tax rate | $ | 2,068 | 21.0 | % | |||||||
State and local taxes, net of federal income tax effect (1) | 2,053 | 20.9 | |||||||||
| Tax credits: | |||||||||||
| Research and development tax credit | (6,275) | (63.7) | |||||||||
Nontaxable or nondeductible items: | |||||||||||
| Meals and entertainment | 123 | 1.2 | |||||||||
| Stock-based compensation | 1,817 | 18.5 | |||||||||
| Section 162(m) limitation | 2,343 | 23.8 | |||||||||
| Common stock warrant expense | 1,840 | 18.7 | |||||||||
| Net federal true-up | 496 | 4.9 | |||||||||
| Other adjustments | 116 | 1.2 | |||||||||
| Changes in unrecognized tax benefits | 1,654 | 16.8 | |||||||||
| Other adjustments | 37 | 0.4 | |||||||||
| Effective tax rate | $ | 6,272 | 63.7 | % | |||||||
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(1) The states and local jurisdictions that contribute to the majority (greater than 50.0%) of the tax effect in this category include New York City, Minnesota, California, and Ohio.
A reconciliation of the provision for (benefit from) income taxes to the amount computed by applying the 21.0% U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
| Year ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | |||||||
| State and local taxes, net of federal income tax effect | 17.2 | 6.3 | |||||||||
| Permanent items | — | 6.7 | |||||||||
| Stock-based compensation | (11.9) | 2.1 | |||||||||
| Net federal true-up | (3.3) | (0.5) | |||||||||
| Change in valuation allowance | (239.3) | (17.8) | |||||||||
| Research and development tax credit | (19.9) | (15.0) | |||||||||
| Common stock warrant expense | 25.1 | 6.3 | |||||||||
| Changes in unrecognized tax benefits | (8.2) | 4.4 | |||||||||
| Convertible note | 13.9 | — | |||||||||
Section 162(m) limitation | 8.7 | — | |||||||||
| Equity compensation related adjustment | 16.0 | — | |||||||||
| Effective tax rate | (180.7) | % | 13.5 | % | |||||||
Income taxes paid, net of refunds, by jurisdiction for years after the adoption of ASU 2023-09 were as follows (in thousands):
| Year ended December 31, 2025 | |||||
| Federal | $ | 2,655 | |||
| State and local | 2,492 | ||||
| Income taxes, net of refunds | $ | 5,147 | |||
Income taxes paid, net of refunds, exceeded 5% of total income taxes paid, net of refunds, in the following jurisdictions (in thousands):
| Year ended December 31, 2025 | |||||
| State | |||||
| California | $ | 321 | |||
| Minnesota | 340 | ||||
| New Jersey | $ | 691 | |||
Income taxes paid during the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09 was $13.2 million and $4.1 million, respectively.
The significant components of deferred income taxes were as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss, credit carryforwards | $ | 22,402 | $ | 19,533 | |||||||
| Accruals and reserves | 8,888 | 9,640 | |||||||||
| User redemption liability | 8,503 | 9,630 | |||||||||
| Capitalized research and development | 22,653 | 39,031 | |||||||||
| Other deferred tax assets | 6,815 | — | |||||||||
Gross deferred tax assets | 69,261 | 77,834 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | (10,793) | (3,416) | |||||||||
| Other deferred tax liabilities | (3,618) | (1,207) | |||||||||
| Gross deferred tax liabilities | (14,411) | (4,623) | |||||||||
| Net deferred tax assets | $ | 54,850 | $ | 73,211 | |||||||
The Company regularly assesses the ability to realize deferred tax assets based on the weight of all available evidence, including such factors as the history of recent earnings and expected future taxable income. Judgment is required in determining whether a valuation allowance should be recorded against deferred tax assets. Due to cumulative income in recent years, including the effect of permanent adjustments, expected revenue growth, and the expectation of sustained profitability in future periods, we concluded that as of December 31, 2025, it was more likely than not that the federal and state tax assets were realizable.
The table below details the activity of the deferred tax assets valuation allowance (in thousands):
| Balance at Beginning of Year | Additions | Deductions | Balance at End of Year | ||||||||||||||||||||
| Deferred tax assets valuation allowance: | |||||||||||||||||||||||
| Year ended December 31, 2025 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Year ended December 31, 2024 | (58,624) | — | 58,624 | — | |||||||||||||||||||
| Year ended December 31, 2023 | $ | (65,270) | $ | — | $ | 6,646 | $ | (58,624) | |||||||||||||||
As of December 31, 2025 and 2024, the Company had no federal net operating losses, net of uncertain tax positions, for U.S. federal income tax purposes. As of December 31, 2025 and 2024, the Company had federal tax credit carryforwards of $11.8 million and $7.8 million, respectively. Total state tax credits as of December 31, 2025 and 2024 were immaterial. If unused, the federal tax credit carryforwards will begin to expire in 2042, and the state tax credits will begin to expire in 2029.
As of December 31, 2025 and 2024, the Company had state net operating loss carryforwards, net of uncertain tax positions, of $92.2 million and $68.1 million, respectively. As of December 31, 2025, $74.9 million of the state net operating losses expire between 2030 through 2055 and $17.3 million can be carried forward indefinitely. If a business combination is consummated such that a change in control occurs, these net operating losses may become subject to an annual limitation as defined under Section 382 of the Internal Revenue Code of 1986, as amended.
Management has evaluated the income tax positions taken or expected to be taken, if any, on income tax returns filed and the likelihood that, upon examination by relevant jurisdictions, those income tax positions would be sustained. The Company recognizes interest accrued and penalties related to unrecognized uncertain tax position benefits in income tax expense. Total accrued interest and penalties as of December 31, 2025 and 2024 were immaterial. A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows (in thousands):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 19,812 | $ | 15,306 | $ | 17,251 | |||||||||||
| Additions/(reductions) based on tax positions related to the current year | (11) | 4,506 | (1,945) | ||||||||||||||
| Additions/(reductions) for tax positions related to prior years | — | — | — | ||||||||||||||
| Ending balance | $ | 19,801 | $ | 19,812 | $ | 15,306 | |||||||||||
An insignificant portion of the unrecognized tax benefits, if recognized, is expected to impact the effective tax rate. A material reduction of unrecognized tax benefits within the next twelve months is not expected.
We file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. While the applicable statute of limitations are generally open for three to four years for the jurisdictions in which we file, we remain subject to income tax examinations for all years in certain jurisdictions due to the usage of carryforward attributes, such as net operating losses and research and development credits. The Internal Revenue Service (IRS) commenced an examination of our U.S. income tax returns for the tax year ended December 31, 2021 in the second quarter of 2024. During the first quarter of 2025, the IRS completed this examination with no changes to the reported tax. However, the IRS has the ability to adjust the research and development credit claimed and net operating loss generated in 2021 when these carryforward tax attributes are utilized in future tax years. As of December 31, 2025, the IRS has not proposed any adjustments to our tax positions. The Company's state income tax returns are subject to audit. The Company is not currently under audit by state taxing authorities.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S. The OBBBA provides changes to the U.S. federal tax law, including expensing of U.S. research expenditures and eligible capital expenditures. The effects of the OBBBA are reflected in the financial statements as of and for the period ending December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 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.