MediaAlpha, Inc.MAX
MediaAlpha, Inc. Income Taxes Disclosure
Income Taxes
MediaAlpha, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from QLH based upon MediaAlpha, Inc.’s economic interest held in QLH. QLH is treated as a pass-through partnership for income tax reporting purposes and is not subject to federal income tax. Instead, QLH’s taxable income or loss is passed through to its members, including MediaAlpha, Inc. Accordingly, the Company is not liable for income taxes on the portion of QLH’s earnings not allocated to it. MediaAlpha, Inc. files and pays corporate income taxes for U.S. federal and state income tax purposes and its corporate subsidiary, Skytiger Studio, Ltd., is subject to taxation in Taiwan. The Company expects this structure to remain in existence for the foreseeable future.
The components of income (loss) before income taxes include the following:
| Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| United States | $ | (111,060) | $ | 23,513 | $ | (57,010) | ||||||||||||||
| Foreign | (1) | (11) | (8) | |||||||||||||||||
| Total | $ | (111,061) | $ | 23,502 | $ | (57,018) | ||||||||||||||
The components of income tax expense (benefit) consisted of the following:
| Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current income tax expense (benefit) | ||||||||||||||||||||
| Federal | $ | (60) | $ | 370 | $ | — | ||||||||||||||
| State | 1,127 | 1,006 | (466) | |||||||||||||||||
| Foreign | 5 | 8 | 3 | |||||||||||||||||
| $ | 1,072 | $ | 1,384 | $ | (463) | |||||||||||||||
| Deferred income tax expense (benefit) | ||||||||||||||||||||
| Federal | $ | (127,525) | $ | — | $ | — | ||||||||||||||
| State | (11,369) | — | — | |||||||||||||||||
| Foreign | — | — | — | |||||||||||||||||
| $ | (138,894) | $ | — | $ | — | |||||||||||||||
| Income tax expense (benefit) | $ | (137,822) | $ | 1,384 | $ | (463) | ||||||||||||||
A reconciliation of the effective tax rate for tax years ended December 31, 2025, 2024 and 2023 is presented below. The Company adopted ASU No. 2023-09 effective January 1, 2025, retrospectively and prior period disclosures have been adjusted.
| Year Ended December 31, | |||||||||||||||||||||||||||||
(in thousands) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||
U.S. federal statutory tax rate | $ | (23,323) | 21.0 | % | $ | 4,936 | 21.0 | % | $ | (11,974) | 21.0 | % | |||||||||||||||||
State and local income taxes, net of federal income tax effect* | $ | (10,652) | 9.6 | % | $ | 796 | 3.4 | % | $ | 81 | (0.1) | % | |||||||||||||||||
Changes in valuation allowance | $ | (106,568) | 96.0 | % | $ | (6,992) | (29.7) | % | $ | 1,617 | (2.8) | % | |||||||||||||||||
Foreign tax effects – Taiwan | $ | 6 | 0.0 | % | $ | 11 | 0.0 | % | $ | 4 | 0.0 | % | |||||||||||||||||
| Effect of cross-border tax laws | |||||||||||||||||||||||||||||
| Global intangible low-taxed income | $ | 4 | 0.0 | % | $ | — | 0.0 | % | $ | — | 0.0 | % | |||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||
Share-based payment awards | $ | 1,236 | (1.1) | % | $ | 421 | 1.8 | % | $ | 4,648 | (8.2) | % | |||||||||||||||||
Officers’ compensation | $ | 2,429 | (2.2) | % | $ | 1,675 | 7.1 | % | $ | 2,098 | (3.7) | % | |||||||||||||||||
Non-deductible settlement | $ | — | 0.0 | % | $ | 1,204 | 5.1 | % | $ | — | 0.0 | % | |||||||||||||||||
| Return-to-Provision | $ | (1,209) | 1.1 | % | $ | 2 | 0.0 | % | $ | — | 0.0 | % | |||||||||||||||||
Change in unrecognized tax benefits | $ | 399 | (0.4) | % | $ | 172 | 0.7 | % | $ | (547) | 1.0 | % | |||||||||||||||||
Non-controlling interest | $ | (237) | 0.2 | % | $ | (1,163) | (4.9) | % | $ | 3,398 | (6.0) | % | |||||||||||||||||
Other adjustments | $ | 93 | (0.1) | % | $ | 322 | 1.4 | % | $ | 212 | (0.4) | % | |||||||||||||||||
| Effective income tax rate | $ | (137,822) | 124.1 | % | $ | 1,384 | 5.9 | % | $ | (463) | 0.8 | % | |||||||||||||||||
*In 2025, state taxes in California and Massachusetts made up the majority (greater than 50%) of the tax effect in this category. In 2024 and 2023, Texas made up the majority (greater than 50%) of the tax effect in this category.
The Company’s effective tax rate of 124.1%, 5.9%, and 0.8% in 2025, 2024, and 2023, respectively, differed from the U.S. federal statutory tax rate of 21.0% due primarily to the tax impacts of changes in valuation allowance.
The jurisdictional components of income taxes paid, net of refunds received, consisted of the following:
| Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Income taxes paid, net of refunds received | ||||||||||||||||||||
Federal taxes | $ | 530 | $ | 220 | $ | (24) | ||||||||||||||
State and local taxes | ||||||||||||||||||||
California | 275 | * | (224) | |||||||||||||||||
Massachusetts | 121 | * | * | |||||||||||||||||
| New Jersey | 66 | * | * | |||||||||||||||||
Other | 18 | 7 | (9) | |||||||||||||||||
Foreign - Taiwan | 4 | 1 | — | |||||||||||||||||
Total | $ | 1,014 | $ | 228 | $ | (257) | ||||||||||||||
*The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
Details of the Company’s deferred tax assets and liabilities are as follows:
| Year Ended December 31, | ||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Investment in partnership | $ | 104,567 | $ | 98,897 | ||||||||||
Net operating and capital loss carryforwards and tax credits | 15,507 | 15,284 | ||||||||||||
| Tax receivables agreement | 29,603 | 1,595 | ||||||||||||
| Other | 3,593 | 4,795 | ||||||||||||
| Total | $ | 153,270 | $ | 120,571 | ||||||||||
| Valuation allowance | (3,536) | (120,571) | ||||||||||||
| Total deferred tax assets | $ | 149,734 | $ | — | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Total deferred tax liabilities | $ | — | $ | — | ||||||||||
| Deferred tax assets | $ | 149,734 | $ | — | ||||||||||
During the year ended December 31, 2025 and 2024, holders of Class B-1 units exchanged 3,285,762 and 6,496,800 Class B-1 units, respectively, together with an equal number of shares of Class B common stock, for shares of Class A common stock on a one-for-one basis (“Exchanges”). In connection with the Exchanges and the changes to the carrying value of the non-controlling interest, the Company recognized additional deferred tax assets of $7.6 million and $3.2 million, respectively, during the year ended December 31, 2025 through additional-paid-in-capital. In connection with the Exchanges, the Company also established additional liabilities related to the TRA of $0.1 million also through additional-paid-in-capital and has presented a net amount of $10.8 million within additional-paid-in-capital in its consolidated statements of stockholders’ equity (deficit). For the Exchanges during the year ended December 31, 2024, the Company did not recognize any additional deferred tax assets as the Company had recognized a full valuation allowance on its deferred tax assets.
As of December 31, 2025, the Company had federal and state net operating loss carryforwards (“NOLs”) of $47.0 million and $46.1 million, respectively, of which $47.0 million and $6.3 million, respectively, have an indefinite life. The remaining state NOLs will begin to expire in 2029. As of December 31, 2025, the Company had federal and state capital loss carryforwards of $7.1 million and $1.4 million, respectively, which will begin to expire in 2029. As of December 31, 2025, the Company had foreign tax credit carryforwards of $1.1 million, which will begin to expire in 2029.
Evaluating the need for and the amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence to determine whether it is more likely than not that these assets will be utilized. In measuring its deferred tax assets and to determine whether a valuation allowance is needed, the Company assesses all available evidence, both positive and negative, based on the weight of that evidence. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. During the fourth quarter of 2025, based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, the Company concluded it is more likely than not that the Company's deferred tax assets will be realizable except for certain state NOLs, federal and state capital loss carryforwards, and foreign tax credits. As a result the Company released substantially all of the valuation allowance with a corresponding income tax benefit of $117.0 million. As of December 31, 2025 and 2024 the Company has recorded a valuation allowance of $3.5 million and $120.6 million, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows for the years indicated.
| Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Beginning balance | $ | 2,030 | $ | 1,369 | $ | 1,710 | ||||||||||||||
| Increase related to current year tax positions | 631 | 625 | 224 | |||||||||||||||||
| Increase related to prior periods tax positions | 151 | 83 | — | |||||||||||||||||
| Decrease related to lapse in applicable statute of limitations | — | (47) | (565) | |||||||||||||||||
| Ending balance | $ | 2,812 | $ | 2,030 | $ | 1,369 | ||||||||||||||
As of December 31, 2025 and 2024, the total liability related to uncertain tax positions, including interest and penalties, was $3.6 million and $2.5 million, respectively. The Company’s uncertain tax positions are primarily related to its state nexus positions. If recognized as of December 31, 2025 and 2024, $2.4 million and $1.7 million, respectively, of the amount of unrecognized tax benefits would impact the effective tax rate. The unrecognized tax benefits differ from the amount that would affect the Company’s effective tax rate primarily because the unrecognized tax benefits were included on a gross basis and did not reflect related secondary impacts, such as the federal deduction for state taxes or adjustments to deferred tax assets that might be required if the Company’s tax positions are sustained. Additionally, the Company will be indemnified for any tax imposed prior to the Reorganization Transactions for which a reserve was recorded, and as the Company recognizes uncertain tax positions the benefits would impact pre-tax results. The Company recognizes interest and penalties, if applicable, related to uncertain tax positions as a component of income tax expense. The Company recorded $0.3 million and $0.2 million of interest and penalties during the year ended December 31, 2025 and 2024, respectively.
The Company files income tax returns as required by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company may be subject to examination by federal and certain state and local tax authorities. As of December 31, 2025, the Company’s federal income tax returns for the tax years 2019 and forward and state and local tax returns for the tax years 2019 and forward, and foreign income tax returns for the tax years 2020 and forward remain open and are subject to examination.
Tax receivables agreement
On October 27, 2020, the Company entered into the TRA with Insignia, Senior Executives, and White Mountains. The Company expects to obtain an increase in its share of the tax basis in the net assets of QLH as Class B-1 units, together with shares of Class B common stock, are exchanged for shares of Class A common stock (or, at the Company’s election, redeemed for cash of an equivalent value). The Company intends to treat any redemptions and exchanges of Class B-1 units as direct purchases for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that it would otherwise pay in the future to various tax authorities.
The TRA provides for the payment by MediaAlpha, Inc. to Insignia and the Senior Executives of 85% of the amount of any tax benefits the Company actually realizes, or in some cases is deemed to realize, as a result of (i) increases in the Company’s share of the tax basis in the net assets of QLH resulting from any redemptions or exchanges of Class B-1 units, (ii) tax basis increases attributable to payments made under the TRA, and (iii) deductions attributable to imputed interest pursuant to the TRA. The TRA will also require us to pay White Mountains 85% of the amount of the cash savings, if any, in U.S. federal, state and local income tax that the Company realizes (or is deemed to realize) as a result of the utilization of the net operating losses of Intermediate Holdco attributable to periods prior to the IPO and the deduction of any imputed interest attributable to the payment obligations under the TRA. The Company expects to benefit from the remaining 15% of any cash savings that it realizes. The amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of MediaAlpha, Inc. in the future.
As of December 31, 2025, the Company believes it can generate sufficient future taxable income and determined that making payments under the TRA is probable under ASC 450 — Contingencies. Accordingly, during the fourth quarter of 2025, the Company recorded a charge of $124.2 million to recognize the liability for estimated payments under the TRA associated with exchanges through September 30, 2025, within other expenses, net in the consolidated statement of operations. The Company also recognized an additional $0.1 million for exchanges that occurred during the fourth quarter of 2025 through additional-paid-in-capital. As of December 31, 2025 and 2024, liabilities under the TRA were $131.1 million and $7.0 million, respectively, of which $6.9 million and $0, respectively, were classified as current within accrued expenses in the consolidated balance sheets.
If the Company had determined as of December 31, 2024 that it was probable that the Company would generate sufficient future taxable income to make future payments under the TRA, it would have recorded a charge of approximately $115 million as of December 31, 2024 to increase the accrued liability for estimated payments under the TRA as of that date to $122 million. No payments were made pursuant to the TRA during the years ended December 31, 2025 and 2024.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 15, 2021 | |
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.