IZEA Worldwide, Inc.IZEA
IZEA Worldwide, Inc. Income Taxes Disclosure
INCOME TAX
Income (loss) from continuing operations before income taxes for the years ended December 31, 2025 and 2024 were as follows:
| Twelve Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| US | $ | (851,011) | $ | (16,710,320) | ||||
| Foreign | 893,337 | (2,141,941) | ||||||
| Total | $ | 42,326 | $ | (18,852,261) | ||||
Income tax expense (benefit) for the years ended December 31, 2025 and 2024 were as follows:
| Twelve Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Current expense (benefit) | ||||||||
| Federal | $ | — | $ | — | ||||
| State | — | — | ||||||
| Foreign | — | — | ||||||
| Total | — | — | ||||||
| Deferred expense (benefit) | ||||||||
| Federal | — | — | ||||||
| State | — | — | ||||||
| Foreign | — | (394,646) | ||||||
| Total | $ | — | $ | (394,646) | ||||
The Company did not recognize income tax expense for the year ended December 31, 2025. For the year ended December 31, 2024, the Company recognized a deferred tax benefit of $0.4 million related to the write-off of deferred tax assets associated with the divestiture of Hoozu.
Cash income taxes paid for the years ended December 31, 2025 and 2024 were as follows:
| Twelve Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Federal income tax paid | $ | — | $ | — | ||||
| State and local income tax paid | — | — | ||||||
| Foreign income tax paid | — | — | ||||||
| Total income tax paid | $ | — | $ | — | ||||
The Company did not make cash income tax payments during the years ended December 31, 2025 and 2024 due to a taxable loss generated for the current year.
The following summary reconciles differences from taxes at the federal statutory rate with the effective rate for the year ended December 31, 2024:
| Twelve Months Ended | |||||
| December 31, 2024 | |||||
| Federal income tax at statutory rates | 21.0 | % | |||
| Change in deferred tax asset valuation allowance | 56.4 | % | |||
| Deferred state taxes | 3.0 | % | |||
| Write-off of NOLs to expire due to 382 limitation | (82.8) | % | |||
| Provision to return | 2.9 | % | |||
| Stock compensation | 1.7 | % | |||
| Change in state deferred rate | 0.1 | % | |||
| Non-deductible expenses: | |||||
| Other | (0.2) | % | |||
| Income taxes at effective rate | 2.1 | % | |||
The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025. All reconciling items that exceeded the 5% threshold prescribed under ASU 2023-09 are presented separately below.
| Twelve Months Ended | ||||||||
| December 31, 2025 | ||||||||
| Dollars | Percentage | |||||||
| U.S. federal statutory tax rate | $ | 8,888 | 21.0 | % | ||||
| State and local income tax, net of federal income tax effect | (783) | (1.8) | % | |||||
| Foreign tax effects | ||||||||
| Canada | ||||||||
| Statutory tax rate difference between Canada and U.S. | 49,134 | 116.1 | % | |||||
| Net operating loss true-up | (200,494) | (473.7) | % | |||||
| Change in valuation allowance | (36,692) | (86.7) | % | |||||
| Other | 451 | 1.1 | % | |||||
| Effect of cross-border tax laws | ||||||||
| GILTI | 187,958 | 444.1 | % | |||||
| Changes in valuation allowance | (1,259,272) | (2975.2) | % | |||||
| Nontaxable or nondeductible items | ||||||||
| Meals & Entertainment | 3,642 | 8.6 | % | |||||
| Keyman life insurance | 463 | 1.1 | % | |||||
| Stock Compensation | 6,179 | 14.6 | % | |||||
| Other | 169 | 0.4 | % | |||||
| Other adjustments (U.S.) | ||||||||
| Net operating loss true-up | 1,349,879 | 3189.2 | % | |||||
| Other deferred true-up | (109,522) | (258.8) | % | |||||
| Effective rate | — | — | % | |||||
Because the Company maintains a full valuation allowance against its U.S. and certain state deferred tax assets, changes in deferred tax assets primarily result in corresponding changes in the valuation allowance, producing significant rate impacts during periods of pretax loss.
State income tax expense is concentrated in a limited number of jurisdictions. For the year ended December 31, 2025, the Company's state effective tax rate was primarily attributable to Florida and California, which total to more than 50% of the overall state effective tax rate due to the location of the Company’s employees and the revenue generated from customers in these states.
The components of the Company’s net deferred income tax assets and liabilities for the years ended December 31, 2025 and 2024 were as follows:
| Twelve Months Ended | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards | $ | 14,018,141 | $ | 14,426,434 | ||||
| Accrued expenses | 133,192 | 438,710 | ||||||
| Stock based compensation | 1,083,285 | 923,703 | ||||||
| Accounts receivable | 31,929 | 49,101 | ||||||
| Other | 754,831 | 659,182 | ||||||
| Total deferred tax assets | 16,021,378 | 16,497,130 | ||||||
| Valuation allowance | (15,570,189) | (16,395,686) | ||||||
| Net deferred tax assets | 451,189 | 101,444 | ||||||
| Deferred tax liabilities | ||||||||
| Fixed assets | (1,858) | (32,910) | ||||||
| Intangible assets | (411,589) | (36,538) | ||||||
| Other | (37,742) | (31,996) | ||||||
| Total deferred tax liabilities | (451,189) | (101,444) | ||||||
| Total deferred tax assets (liabilities) | $ | — | $ | — | ||||
Net Operating Loss Carryforwards and Valuation Allowance
As of December 31, 2025, the Company had net operating loss (“NOL”) carryforwards of approximately $48.7 million for U.S. federal income tax purposes, subject to certain utilization limitations under Internal Revenue Code (“IRC”) Section 382. During 2024, the Company conducted a study of its past ownership changes and determined that approximately $55.6 million of its federal NOLs were limited and would likely expire before they could be utilized. Based on our history of losses, and the restrictions imposed by Section 382, management determined that it is unlikely future taxable income will be sufficient to realize benefit from its NOLs. Accordingly, the Company has recorded a full valuation allowance of the deferred tax asset associated with $48.7 million in usable NOLs.
The Company continuously assesses the likelihood of realizing its deferred tax assets and adjusts their carrying amount through a valuation allowance when it is more likely than not that some or all of the assets will not be realized. In evaluating realizability, the Company considers multiple factors, including recent cumulative earnings by taxing jurisdiction, projected future taxable income or loss, available carryforward periods for tax reporting, and other relevant considerations.
The valuation allowance against deferred tax assets decreased by $0.8 million in 2025, primarily due to the realization and reversal of deductible temporary differences, including accrued expenses and fixed asset related differences, as well as the utilization of net operating losses. These decreases were partially offset by deferred tax assets generated from stock-based compensation, Section 174 research and development expenditures, capital loss carryforwards, and capitalized software.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examinations by federal, foreign, and state and local jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from 2022 to the present in the U.S. and in the Company's foreign operations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and local tax authorities to the extent utilized in a future period.
Uncertain Tax Positions
The Company recognizes uncertain tax positions in accordance with ASC 740. The Company had no unrecognized tax benefits as of December 31, 2025 and 2024. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 17, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 30, 2021 | |
| 2019 | Mar 30, 2020 | |
| 2018 | Mar 28, 2019 | |
| 2017 | Apr 17, 2018 | |
| 2016 | Mar 28, 2017 | |
| 2015 | Mar 30, 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.