JOINT CorpJYNT
JOINT Corp Income Taxes Disclosure
Income Taxes
The components of loss from continuing operations before the provision for income taxes, by taxing jurisdiction are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Domestic | $ | (229,504) | $ | (1,608,738) | |||||||
| Total | $ | (229,504) | $ | (1,608,738) | |||||||
Income tax expense reported in the consolidated income statements is comprised of the following:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Current expense: | |||||||||||
| State, net of state tax credits | $ | 38,653 | $ | 62,759 | |||||||
| Total current expense | 38,653 | 62,759 | |||||||||
| Deferred expense (benefit): | |||||||||||
| Federal | — | (57,153) | |||||||||
| Total deferred expense (benefit) | — | (57,153) | |||||||||
| Total income tax expense | $ | 38,653 | $ | 5,606 | |||||||
The tax effects of temporary differences that give rise to significant components of the deferred tax assets and liabilities are provided below:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income tax assets: | |||||||||||
| Accrued expenses | $ | 757,576 | $ | 1,607,324 | |||||||
| Deferred revenue | 3,535,528 | 3,909,555 | |||||||||
| Lease liabilities | 3,795,895 | 5,710,136 | |||||||||
| Goodwill - component 1 | 383,987 | — | |||||||||
| Goodwill - component 2 | 49,829 | 55,368 | |||||||||
| Fixed assets | 471,855 | — | |||||||||
| Nonqualified stock options | 117,962 | 322,376 | |||||||||
| Net operating loss carryforwards | 3,261,907 | 3,029,413 | |||||||||
| Tax credits | 35,850 | 35,850 | |||||||||
| Intangible assets | 3,416,636 | 3,921,742 | |||||||||
| Stock-based compensation expense | 141,563 | 139,038 | |||||||||
| Total | 15,968,588 | 18,730,802 | |||||||||
| Less: valuation allowance | (11,327,659) | (12,307,555) | |||||||||
| Total deferred income tax assets | 4,640,929 | 6,423,247 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Lease ROU asset | (4,320,092) | (5,392,996) | |||||||||
| Deferred franchise costs | (320,837) | (75,284) | |||||||||
| Goodwill - component 1 | — | (807,824) | |||||||||
| Fixed assets | — | (147,143) | |||||||||
| Total deferred income tax liabilities | (4,640,929) | (6,423,247) | |||||||||
Net deferred income taxes | $ | — | $ | — | |||||||
A valuation allowance of $11.3 million and $12.3 million was recorded against the deferred tax asset balance of The Joint Corp., without its VIEs, as of December 31, 2025 and 2024, respectively. During the year ended December 31, 2025, the valuation allowance decreased by $1.0 million. As of each reporting date, we consider new evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets in each reporting jurisdiction. A significant piece of objective evidence evaluated was the cumulative loss incurred in each jurisdiction over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth, in evaluating the need for a valuation allowance. As a result, we determined that it is more likely than not that The Joint Corp. will not realize its deferred tax assets as of December 31, 2025, and has recorded a valuation allowance after consideration of any recorded deferred tax liabilities.
Additionally, deferred tax assets attributable to its VIEs of $1.0 million and $1.1 million were classified as discontinued operations as of December 31, 2025 and 2024, respectively, and are related to deferred revenue. See Note 3, Divestitures for more information on discontinued operations.
The Joint Corp., without the VIEs, has federal gross net operating loss carryforwards of $10.2 million and $12.3 million as of December 31, 2025 and 2024, respectively. The federal tax effected impacts of these net operating losses were $2.1 million and $2.6 million as of December 31, 2025 and 2024, respectively. $7.8 million of the federal net operating loss as of December 31, 2025 is subject to a 20-year carryforward, with a portion beginning to expire in 2036. $2.3 million of the federal net operating loss as of December 31, 2025 has an indefinite carryforward period.
The Joint Corp., without the VIEs, has state net operating loss carryforwards of $10.2 million and $3.6 million as of December 31, 2025 and 2024, respectively. The determination of the state net operating loss carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards. If such net operating loss carryforwards are not utilized, a portion will begin to expire in 2026.
We have research and development credits of $14 thousand that will begin to expire in 2031 and California Alternative Minimum Tax credits of $22 thousand that do not expire.
The provision for income taxes differs from the amount calculated using the statutory federal corporate income tax rate of 21% due to the following items:
| For the Years Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Amount | Percent | Amount | Percent | ||||||||||||||||||||
| Loss from continuing operations before provision for income taxes | $ | (229,504) | $ | (1,608,738) | |||||||||||||||||||
| Expected federal tax expense at U.S. federal statutory rate | (48,388) | 21.0 | % | (337,835) | 21.0 | % | |||||||||||||||||
| State and local income taxes (net of federal income tax effect) (1) | (128,782) | 56.1 | % | 79,774 | (5.0) | % | |||||||||||||||||
| Changes in valuation allowances | (507,419) | 221.1 | % | 66,503 | (4.1) | % | |||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||
| Section 162(m) officer compensation | — | — | % | 85,992 | (5.3) | % | |||||||||||||||||
| Share based compensation (2) | (28,302) | 12.3 | % | (119,263) | 7.4 | % | |||||||||||||||||
| Payroll tax penalty | (45,749) | 19.9 | % | — | — | % | |||||||||||||||||
| Meals and entertainment | 23,549 | (10.2) | % | 30,462 | (1.9) | % | |||||||||||||||||
| Other items | 17,710 | (7.7) | % | 26,572 | (1.6) | % | |||||||||||||||||
| Changes in unrecognized tax benefits | 300,582 | (130.9) | % | 212,687 | (13.2) | % | |||||||||||||||||
| Other adjustments: | |||||||||||||||||||||||
| Deferred true-up to deferred franchise costs | 285,915 | (124.5) | % | — | — | % | |||||||||||||||||
| Current year expirations of non-qualified stock options | 217,356 | (94.7) | % | — | — | % | |||||||||||||||||
| Other items | (47,819) | 20.8 | % | (39,286) | 2.4 | % | |||||||||||||||||
| Total income tax expense and effective rate | $ | 38,653 | (16.8) | % | $ | 5,606 | (0.3) | % | |||||||||||||||
___________
(1) State taxes in Arizona, California and Texas made up the majority (greater than 50%) of the tax effect in this category.
(2) Share based compensation includes incentive stock options, non-qualified stock options and restricted stock awards.
Changes in our income tax expense relate primarily to state income taxes (net of federal tax and permanent differences), changes in tax rates, stock compensation, shortfall/windfall on stock compensation expense, change in valuation allowance and uncertain tax positions during the year ended December 31, 2025, as compared to the year ended December 31, 2024. For the years ended December 31, 2025 and 2024, effective tax rates were (16.8)% and (0.3)%, respectively. The difference between the statutory federal income tax rate and our effective tax rate was primarily due to the uncertain tax position net impact and state taxes (net of federal taxes) for the year ended December 31, 2025. The difference between the statutory federal income tax rate and our effective tax rate was primarily due to the valuation allowance, change in tax rate and uncertain tax position for the year ended December 31, 2024.
We apply a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit or obligation as the largest amount that is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments.
For the years ended December 31, 2025 and 2024, we had gross uncertain tax positions attributable to the VIEs, recorded as discontinued operations, of $0.6 million and $0.9 million, respectively.
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | 948,182 | $ | 1,175,766 | |||||||
| Reductions for expiration of the statute of limitations | (314,468) | (227,584) | |||||||||
| Ending balance | $ | 633,714 | $ | 948,182 | |||||||
As of December 31, 2025 and December 31, 2024, there were $20 thousand and $22 thousand, respectively, of unrecognized tax benefits that if recognized would affect the annual effective tax rate.
Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. Accrued interest and penalties were $178 thousand and $202 thousand for the years ended December 31, 2025 and 2024, respectively, and recorded as other liabilities.
The amount of cash paid for income taxes (net of refunds received) was as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Federal | $ | 321,000 | $ | 285,510 | |||||||
| State: | |||||||||||
| Arizona | 62,000 | — | |||||||||
| California | 168,000 | 182,000 | |||||||||
| Texas | 62,000 | 51,026 | |||||||||
| Other state jurisdictions | 13,752 | 91,956 | |||||||||
| Income taxes paid (net of refunds received) | $ | 626,752 | $ | 610,492 | |||||||
With exceptions due to the generation and utilization of net operating losses or credits, as of December 31, 2025, we are no longer subject to federal and state examinations by taxing authorities for tax years before 2022 and 2021, respectively.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 14, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 6, 2020 | |
| 2018 | Mar 11, 2019 | |
| 2017 | Mar 9, 2018 | |
| 2016 | Mar 10, 2017 | |
| 2015 | Mar 17, 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.