LiveWire Group, Inc.LVWR
LiveWire Group, Inc. Income Taxes Disclosure
Income Taxes
The income tax provision has been calculated using the separate return method, which is meant to reflect how taxes would have been recorded, had the Company filed its own tax return.
The income tax provision for the years ended December 31, consists of the following (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | — | $ | — | $ | 3 | |||||||||||
| State | — | — | (10) | ||||||||||||||
| Foreign | 157 | 21 | 11 | ||||||||||||||
| Current income tax provision | $ | 157 | $ | 21 | $ | 4 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | 32 | $ | 26 | $ | 78 | |||||||||||
| State | 4 | 5 | — | ||||||||||||||
| Foreign | (4) | (9) | (4) | ||||||||||||||
| Deferred income tax provision | 32 | 22 | 74 | ||||||||||||||
| Total income tax provision | $ | 189 | $ | 43 | $ | 78 | |||||||||||
The components of loss before income taxes for the years ended December 31, were as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (75,576) | $ | (93,909) | $ | (109,491) | |||||||||||
| Foreign | 651 | 27 | 19 | ||||||||||||||
| Loss before income taxes | $ | (74,925) | $ | (93,882) | $ | (109,472) | |||||||||||
The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 2, Summary of Significant Accounting Policies — Accounting Standards Adopted in 2025 for additional details on the adoption of ASU 2023-09. The Company has adopted the ASU on a prospective basis.
Income tax provision differs from the amount that would be provided by applying the statutory U.S. corporate income tax rate for the year ended December 31, 2025 due to the following items (in thousands):
| Amount | Percentage | ||||||||||
| United States Statutory Tax Rate | $ | (15,734) | 21.00 | % | |||||||
| State and Local Income Taxes, Net of Federal Income Tax Effect | 4 | (0.01 | %) | ||||||||
| Foreign Tax Effects | 17 | (0.02 | %) | ||||||||
| Tax Credits | (488) | 0.65 | % | ||||||||
| Changes in Valuation Allowances | 313 | (0.42 | %) | ||||||||
| Nontaxable or Nondeductible items | 965 | (1.29 | %) | ||||||||
| Other Adjustments | |||||||||||
| Unbenefited losses and credits | 15,638 | (20.87 | %) | ||||||||
| Other | (526) | 0.70 | % | ||||||||
| Effective Tax Rate | $ | 189 | (0.25 | %) | |||||||
During the year ended December 31, 2025, state taxes in California, Minnesota, New York and Wisconsin made up the majority of the tax effect in this category.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
| 2024 | 2023 | |||||||||||||
| Benefit at statutory rate | $ | (19,715) | $ | (22,989) | ||||||||||
| State taxes, net of federal benefit | (2,959) | (2,747) | ||||||||||||
| Foreign rate differential | 4 | 3 | ||||||||||||
| Nondeductible expenses (benefits) | 609 | (293) | ||||||||||||
| Unbenefited losses and credits | 27,421 | 28,250 | ||||||||||||
| Valuation allowance | 3,555 | 1,381 | ||||||||||||
| Change in value of warrants | (2,262) | 844 | ||||||||||||
| Research & Development Tax Credit | (6,478) | (4,057) | ||||||||||||
| Other | (132) | (314) | ||||||||||||
| Income tax provision | $ | 43 | $ | 78 | ||||||||||
The Company generated operating losses in each of the years presented. The income tax provision (benefit) recognized related to these losses was zero for each of the years ended December 31, 2025, 2024, and 2023. Operating results of the U.S. entities are included in the consolidated U.S. federal and combined state tax returns of H-D and these tax attributes have been fully utilized by H-D and are no longer available to the Company for future use. Future income tax provisions (benefits) may be impacted by future changes in the utilization of LiveWire attributes by H-D. The difference between the benefit at the statutory rate and the income tax provision (benefit) related to these operating losses is reflected in the table above as unbenefited losses.
After an assessment of the positive and negative evidence regarding the realizability of the separate state NOLs reflected in the financials, it was determined a valuation allowance continues to be required on separate state NOLs. Additionally, it was necessary to assess the positive and negative evidence of the realizability of the U.S. federal and consolidated state net deferred tax asset balance remaining after H-D utilization of LiveWire attributes for the periods ended December 31, 2025 and 2024. After such an assessment, it was determined a valuation allowance continues to be required. The difference between the benefit at the statutory rate and the income tax provision (benefit) related to these valuation allowances is reflected in the table above as valuation allowance.
The Company’s non-US entities generated both income tax and operating losses for a net income tax provision of $153 thousand, $12 thousand, and $7 thousand for the years ended December 31, 2025, 2024, and 2023, respectively. Non-US operating losses cannot be utilized by H-D, therefore a deferred tax asset was recorded. After assessment of the positive and negative evidence regarding realizability of the non-US deferred tax assets, it was determined the deferred tax assets are more likely than not to be realized and no valuation allowance was recorded.
The principal components of the Company’s deferred income tax assets and liabilities as of December 31, include the following (in thousands):
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Capitalized research & experimental expenditures | $ | 13,929 | $ | 14,495 | |||||||
| Accruals not yet tax deductible | 1,749 | 1,919 | |||||||||
| Stock compensation | 933 | 1,002 | |||||||||
| Net operating loss and credit carryforwards | — | 7 | |||||||||
| UNICAP | 138 | 138 | |||||||||
| Amortization, book in excess of tax | 1,061 | 1,051 | |||||||||
| Lease liability | 177 | 191 | |||||||||
| Deferred tax assets before valuation allowance | 17,987 | 18,803 | |||||||||
| Less: Valuation allowance | (13,605) | (13,248) | |||||||||
| Total deferred tax assets | 4,382 | 5,555 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation, tax in excess of book | $ | (3,563) | $ | (4,863) | |||||||
| Amortization, tax in excess of book | (765) | (620) | |||||||||
| Right-of-use asset | (197) | (183) | |||||||||
| Total deferred liabilities | (4,525) | (5,666) | |||||||||
| Net deferred tax liability | $ | (143) | $ | (111) | |||||||
The net deferred tax liability balance increased from December 31, 2025 to December 31, 2024 primarily due to an increase in the deferred tax liability balance related to tax basis amortizable goodwill that is not amortized for book purposes.
The tax operating loss and tax credit carryforwards, calculated on the separate return method for allocating tax expense, have been utilized by H-D in the consolidated tax return, and therefore are not available to the Company in future periods. Under the terms of the Company’s Tax Matters Agreement with H-D, LiveWire will receive no compensation from H-D for the use of such attributes, but they may be used to offset any future liabilities that may be owed by LiveWire to H-D under the Tax Matters Agreement. In addition, these tax loss and credit carryforwards would not have been realized on a separate return basis. As a result, consistent with prior periods, neither the deferred tax assets nor the full valuation allowances have been recorded for these hypothetical attributes. For the period from the close of the Business Combination and effective date of the Tax Matters Agreement, the unrecorded tax net operating loss and tax credit carryforward, unbenefited by LiveWire, was $77,741 thousand.
The Company recognizes interest and penalties related to unrecognized tax benefits in the income tax (benefit) provision. There were no unrecognized tax benefits as of December 31, 2025 and 2024.
The Company made $14 thousand in foreign income tax payments for the year ended December 31, 2025. The Company made $7 thousand in foreign income tax payments for the year ended December 31, 2024 and did not make any income tax payments for the year ended December 31, 2023.
LiveWire and its subsidiaries are currently members of H-D’s consolidated, combined, unitary and other similar groups for federal, state and local income tax purposes. The consolidated group files U.S. federal and various state income tax returns which are no longer subject to examination before 2019. LiveWire has separate state and non-US filing requirements that will remain open to tax authority examination through 2029.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
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.