MARA Holdings, Inc.MARA
MARA Holdings, Inc. Income Taxes Disclosure
INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740, which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.
Effective January 1, 2025, the Company adopted ASU 2023-09 on a prospective basis, which enhances the transparency and decision usefulness of income tax disclosures in our financial statements. This update requires entities to disclose a detailed reconciliation of the federal statutory income tax rate to the effective tax rate and the disaggregation of income (loss) before income taxes, income tax benefit (expense) and income taxes paid, net of refunds by domestic federal, domestic state, and foreign jurisdictions. Furthermore, changes in unrecognized tax benefits must be categorized based on their relation to current or prior annual reporting periods.
For the years ending December 31, 2025, 2024 and 2023, income (loss) before taxes is as follows:
| For the Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
United States | $ | (1,359,671) | $ | 616,503 | $ | 277,599 | ||||||||||||||
Foreign | (8,597) | — | — | |||||||||||||||||
Income (loss) before income taxes | $ | (1,368,268) | $ | 616,503 | $ | 277,599 | ||||||||||||||
The components of the provision for income taxes are as follows:
| For the Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Current income tax expense | ||||||||||||||||||||
| Federal | $ | 159 | $ | — | $ | — | ||||||||||||||
| State | 2,112 | 2,278 | 1,140 | |||||||||||||||||
Total current income tax expense | 2,271 | 2,278 | 1,140 | |||||||||||||||||
Deferred tax expense (benefit) | ||||||||||||||||||||
| Federal | (263,213) | 142,087 | 66,129 | |||||||||||||||||
| State | (9,838) | 9,090 | 1,659 | |||||||||||||||||
Total deferred tax expense (benefit) | (273,051) | 151,177 | 67,788 | |||||||||||||||||
| Change in valuation allowance | 214,404 | (77,960) | (52,502) | |||||||||||||||||
Net deferred tax expense after valuation allowance (benefit) | (58,647) | 73,217 | 15,286 | |||||||||||||||||
Income tax provision (benefit) | $ | (56,376) | $ | 75,495 | $ | 16,426 | ||||||||||||||
A reconciliation of the provision of income taxes to the amount computed by applying the U.S. federal income tax rate of 21% to income before income taxes after the adoption of ASU 2023-09 is as follows:
| For the Year Ended December 31, | ||||||||||||||
(in thousands, except for percentage data) | 2025 | |||||||||||||
| Federal income tax expense at the statutory rate | $ | (287,249) | 21.0 | % | ||||||||||
Domestic federal: | ||||||||||||||
Tax Credits: | ||||||||||||||
Research and development credits | (2,325) | 0.2 | % | |||||||||||
Nontaxable or nondeductible items: | ||||||||||||||
Compensation adjustments | 23,060 | (1.7) | % | |||||||||||
Political contribution | 279 | — | % | |||||||||||
Controlled foreign company reversal | 1,411 | (0.1) | % | |||||||||||
Other | 185 | — | % | |||||||||||
Changes in valuation allowance | 206,966 | (15.1) | % | |||||||||||
Domestic state income taxes, net of federal tax expense | (781) | 0.1 | % | |||||||||||
Foreign tax effects: | ||||||||||||||
United Arab Emirates | 728 | (0.1) | % | |||||||||||
Worldwide changes in unrecognized tax benefits | 581 | — | % | |||||||||||
Other | 769 | (0.1) | % | |||||||||||
Effective tax rate | $ | (56,376) | 4.1 | % | ||||||||||
A reconciliation of the provision for income taxes to the about computed by applying the U.S. federal income tax rate of 21% to income before income taxes prior to the adoption of ASU 2023-09 is as follows:
| For the Year Ended December 31, | ||||||||||||||||||||||||||
| (in thousands, except percentage data) | 2024 | 2023 | ||||||||||||||||||||||||
Federal income tax expense at the statutory rate | $ | 129,517 | 21.0 | % | $ | 58,296 | 21.0 | % | ||||||||||||||||||
| State income taxes, net of federal tax expense | 10,872 | 1.8 | % | 2,559 | 0.9 | % | ||||||||||||||||||||
| Executive compensation deduction limitation | 21,241 | 3.4 | % | 2,587 | 0.9 | % | ||||||||||||||||||||
| Excess tax benefit related to share-based compensation | (2,696) | (0.4) | % | 470 | 0.2 | % | ||||||||||||||||||||
| Non-deductible other expenses | 1,349 | 0.2 | % | 1,798 | 0.6 | % | ||||||||||||||||||||
| Change in valuation allowance | (77,960) | (12.6) | % | (52,502) | (18.9) | % | ||||||||||||||||||||
| Prior year true-ups | — | — | % | 3,346 | 1.2 | % | ||||||||||||||||||||
| Other, net | (6,828) | (1.1) | % | (128) | — | % | ||||||||||||||||||||
Income tax expense | $ | 75,495 | 12.3 | % | $ | 16,426 | 5.9 | % | ||||||||||||||||||
Components of deferred tax assets and liabilities at December 31, 2025 and 2024 are presented below:
| (in thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Tax credit carryforwards | $ | 3,945 | $ | 2,201 | ||||||||||
| Net operating loss carryforwards | 257,836 | 120,224 | ||||||||||||
| Intangible assets | 23,640 | 5,836 | ||||||||||||
Property and equipment | 27,772 | 10,463 | ||||||||||||
| Stock compensation | 13,970 | 10,435 | ||||||||||||
Disallowed interest | — | 2,254 | ||||||||||||
| Bad debt reserve | 9,864 | 9,830 | ||||||||||||
| Research and development costs | 8,163 | 7,867 | ||||||||||||
| Accruals, reserves and other | 2,889 | 3,589 | ||||||||||||
Capital losses | — | 283 | ||||||||||||
Gain on hedge instruments | 4,257 | 4,243 | ||||||||||||
| Total gross deferred tax assets | 352,336 | 177,225 | ||||||||||||
| Less: Valuation allowance | (214,404) | — | ||||||||||||
| Net deferred tax assets | 137,932 | 177,225 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Unrealized gains | (8,756) | — | ||||||||||||
Gain on investment | (3,640) | (912) | ||||||||||||
Digital assets | (155,393) | (264,816) | ||||||||||||
| Total gross deferred liabilities | (167,789) | (265,728) | ||||||||||||
| Net deferred tax liability | $ | (29,857) | $ | (88,503) | ||||||||||
As of December 31, 2025, the valuation allowance for deferred tax assets was $214.4 million. There was no valuation allowance for deferred tax assets as of December 31, 2024. Accordingly, the valuation allowance increased by $214.4 million for the year ended December 31, 2025. The increase was primarily attributable to cumulative losses and the expected timing of taxable temporary differences related to the Company’s bitcoin holdings, which reduced the Company’s ability to support realization of its deferred tax assets. Based on management’s evaluation of all available positive and negative evidence, management concluded that it is more-likely-than-not that the Company will not realize all of its deferred tax assets in the United States. Accordingly, the Company recorded a valuation allowance to reduce deferred tax assets to the amount expected to be realized. Changes in the fair market value of bitcoin in future periods may result in corresponding increases or decreases to the valuation allowance.
As of December 31, 2025, the Company has federal and state net operating loss carryforwards of $1.4 billion, which are available to offset future taxable income.
The Company has the following attributes and credit carryforwards:
| (in thousands) | Gross Amount | Expiring | ||||||||||||
| Federal net operating loss carryforwards | $ | 1,503 | 2035 | |||||||||||
| Federal net operating loss carryforwards | 1,187,941 | Indefinite | ||||||||||||
| State net operating loss carryforwards | 255,563 | Various | ||||||||||||
| Federal tax credit carryforwards | 3,904 | 2040-2044 | ||||||||||||
| State tax credit carryforwards | 40 | Indefinite | ||||||||||||
Section 382 and Section 383 of the Internal Revenue Code impose annual limitations on the utilization of U.S. tax attribute carryforwards following a change of control. Based on the Company’s analysis, approximately $83.9 million of tax attributes were subject to limitation under Section 382 and 383 as of December 31, 2025. As a result of these limitations, $29.7 million of such attributes are expected to expire unutilized.
A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the tax years ended December 31, 2025, 2024 and 2023 is as follows:
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Balance, beginning of year | $ | 5,857 | $ | 5,296 | $ | 5,252.00 | ||||||||||||||
Change in prior year tax positions | (24) | 1 | (31) | |||||||||||||||||
Change in current year tax positions | 605 | 560 | 75 | |||||||||||||||||
Balance, end of year | $ | 6,438 | $ | 5,857 | $ | 5,296 | ||||||||||||||
The Company has established a reserve against its federal research and development tax credits generated in 2025 and previous years. The Company has also established a reserve related to its executive compensation deduction limitation in 2022.
As of December 31, 2025, the Company had $6.4 million of unrecognized tax benefits, all of which were offset against deferred tax assets. If recognized as of the date, these unrecognized tax benefits would result in a $6.4 million favorable impact on the effective rate on income from continuing operations. The Company accrues interest and penalties related to uncertain tax positions as a component of income tax expense on the Consolidated Statements of Operations. No interest and penalties were recognized or accrued for the years ended December 31, 2025 and 2024. The Company does not anticipate that any of its remaining unrecognized tax benefits will be recognized in the next twelve months.
The Company files federal and state income tax returns. The 2021-2024 tax years generally remain subject to examination by the IRS and various state taxing authorities, although the Company is not currently under examination in any jurisdiction.
For the year ended December 31, 2025, the Company paid $2.0 million in cash income taxes, net of refunds. No cash income taxes, net of refunds were paid to U.S. federal or foreign tax authorities during the year. The $2.0 million represents cash income taxes paid, net of refunds, to the State of Texas, partially offset by immaterial refunds received from other jurisdictions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 10, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 24, 2020 | |
| 2018 | Mar 25, 2019 | |
| 2017 | Apr 16, 2018 | |
| 2016 | Apr 5, 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.