IRADIMED CORP Income Taxes Disclosure
9 — Income Taxes
Income before provision for income taxes was as follows:
Year Ended December 31, | ||||||
2025 | | 2024 | ||||
(in thousands) | ||||||
Domestic | $ | 28,361 |
| $ | 24,238 | |
Foreign | — | 37 | ||||
Total pre-tax book income: | $ | 28,361 |
| $ | 24,275 | |
The components of the provision for income taxes are as follows:
Year Ended December 31, | ||||||
| 2025 | | 2024 | |||
(in thousands) | ||||||
Current taxes: | ||||||
U.S. federal |
| $ | 2,136 |
| $ | 4,496 |
State | 1,018 | 1,238 | ||||
Foreign | — | 5 | ||||
Total current tax expense | 3,154 | 5,739 | ||||
Deferred taxes: | ||||||
U.S. federal | 2,534 | (596) | ||||
State | 193 | (102) | ||||
Total deferred tax expense | 2,727 | (698) | ||||
Provision for income tax expense |
| $ | 5,881 |
| $ | 5,041 |
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after adoption of ASU 2023-09 is as follows:
Year Ended December 31, | ||||||
2025 | ||||||
(in thousands) | Percent | |||||
Income taxes at the U.S. federal statutory tax rate | $ | 5,956 | 21.0% | |||
State and local income taxes, net of federal income tax benefit (1) | 997 | 3.5% | ||||
Effects of cross border tax laws | (140) | (0.5)% | ||||
Tax credits | ||||||
R&D credits | (373) | (1.3)% | ||||
Tax credits - other | (7) | 0.0% | ||||
Nontaxable or nondeductible items | ||||||
Stock compensation expense and tax windfalls upon exercises and vesting | (367) | (1.3)% | ||||
Nontaxable or nondeductible items - other | 102 | 0.4% | ||||
Other adjustments, net | (287) | (1.1)% | ||||
5,881 | 20.7% | |||||
(1) State income tax is primarily driven by Florida and California | ||||||
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory 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 | | ||
Statutory U.S. federal tax rate |
| 21.0 | % | 21.0 | % |
Stock compensation expense and tax windfalls upon exercises and vesting |
| (1.0) |
| (0.9) | |
State taxes, net of federal benefit |
| 3.5 |
| 4.8 | |
Permanent items |
| 0.3 |
| 0.4 | |
Provision to return adjustments, net |
| (0.4) |
| (1.7) | |
Foreign derived intangible income |
| (1.2) |
| (1.8) | |
Research and development credits |
| (1.5) |
| (1.2) | |
Other, net |
| — |
| 0.3 | |
Effective tax rate |
| 20.7 | % | 20.9 | % |
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. The significant components of the deferred tax assets and liabilities were as follows:
As of December 31, | ||||||
| 2025 | | 2024 | |||
(in thousands) | ||||||
Deferred income tax assets (liabilities): | ||||||
Stock compensation |
| $ | 198 |
| $ | 406 |
Deferred revenue | 982 | 643 | ||||
Reserves and allowances | 447 | 440 | ||||
Depreciation and amortization | (954) | (391) | ||||
Capitalized research and development | (619) | 1,721 | ||||
Other, net | 40 | 1 | ||||
Total deferred income taxes, net |
| $ | 94 |
| $ | 2,820 |
The Company files income tax returns with the U.S. federal government, and various state and local jurisdictions that are subject to potential examination by the respective taxing authorities. The Company is subject to income tax examinations for U.S. Federal taxes for 2022 and subsequent years. Various U.S. state income taxes for 2021 and subsequent years remain open by statute.
A valuation allowance for deferred tax assets is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Management has evaluated the need for a valuation allowance for deferred tax assets, considering the reversal of temporary differences, and believes it is more likely than not that the Company will realize the recorded net deferred income tax assets as of December 31, 2025 and, therefore, there is no recorded valuation allowance.
On July 4, 2025, the United States enacted The One Big Beautiful Bill Act (the “Bill”), which includes provisions that are expected to reduce our cash income tax payments over the next several years, with variability across periods, primarily due to additional depreciation deductions and the reinstatement of the immediate deduction of domestic research and development expenses. The Bill has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. The Bill did not have a material impact on our effective income tax rate for the year ended December 31, 2025.
The amounts of cash income taxes paid by the Company were as follows:
Year Ended | |||
2025 | |||
(in thousands) | |||
Federal | $ | 2,855 | |
State and Local | |||
California | 399 | ||
Florida | 356 | ||
Other jurisdictions | 311 | ||
Foreign | 2 | ||
Income taxes, net of amounts refunded | $ | 3,923 | |
The amount of cash income taxes paid by the Company during the year ended December 31, 2024
was $6.5 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Mar 2, 2023 | |
| 2021 | Mar 4, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 6, 2020 | |
| 2018 | Mar 7, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Mar 10, 2017 | |
| 2015 | Mar 10, 2016 | |
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.