MIAMI INTERNATIONAL HOLDINGS, INC.MIAX
MIAMI INTERNATIONAL HOLDINGS, INC. Income Taxes Disclosure
INCOME TAXES
Income before income taxes, income tax provision and income tax paid consists of the following (in thousands):
| Year Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income before income tax provision: | |||||||||||||||||
| Domestic | $ | (25,576) | $ | (31,186) | $ | (22,796) | |||||||||||
| Foreign | (43,003) | 136,267 | 727 | ||||||||||||||
| Total | $ | (68,579) | $ | 105,081 | $ | (22,069) | |||||||||||
| Current tax expense (benefit): | |||||||||||||||||
Federal | $ | — | $ | — | $ | — | |||||||||||
State | 14 | (93) | 167 | ||||||||||||||
| Foreign | 962 | — | — | ||||||||||||||
Total current | 976 | (93) | 167 | ||||||||||||||
| Deferred tax expense (benefit): | |||||||||||||||||
Federal | 36 | 939 | 53 | ||||||||||||||
State | 512 | 2,249 | (917) | ||||||||||||||
| Foreign | (74) | — | — | ||||||||||||||
Total deferred | 474 | 3,188 | (864) | ||||||||||||||
| Total income tax expense (benefit) | $ | 1,450 | $ | 3,095 | $ | (697) | |||||||||||
| Income tax paid (received) | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State and local | |||||||||||||||||
| Illinois | 257 | (1,155) | — | ||||||||||||||
| New York City | 12 | 54 | 32 | ||||||||||||||
| New York State | 39 | 106 | 7 | ||||||||||||||
| Minnesota | — | (349) | 11 | ||||||||||||||
| Pennsylvania | 263 | 210 | 548 | ||||||||||||||
| Other | 110 | 86 | 4 | ||||||||||||||
| Foreign | |||||||||||||||||
| Guernsey | 98 | — | — | ||||||||||||||
| United Kingdom | 5 | — | — | ||||||||||||||
| Total | $ | 784 | $ | (1,048) | $ | 602 | |||||||||||
A reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate for the years ended December 31, 2025, 2024 and 2023 is as shown in the table below (amounts in thousands). The Company has elected to apply retrospective application of ASU 2023-09 in its presentation of the reconciliation.
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||||
| Statutory U.S. federal income tax rate | $ | (14,402) | 21.0 | % | $ | 22,067 | 21.0 | % | $ | (4,634) | 21.0 | % | ||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect1 | 330 | (0.5) | % | 1,816 | 1.7 | % | (963) | 4.4 | % | |||||||||||||||||||||||||||||
| Foreign tax effects: | ||||||||||||||||||||||||||||||||||||||
Bermuda2 | 12,270 | (17.9) | % | (28,377) | (27.0) | % | 183 | (0.8) | % | |||||||||||||||||||||||||||||
Guernsey3 | (382) | 0.6 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
United Kingdom (UK)4 | ||||||||||||||||||||||||||||||||||||||
| Statutory rate difference between UK and USA | 382 | (0.6) | % | 46 | — | % | 65 | (0.3) | % | |||||||||||||||||||||||||||||
Non-taxable income in UK5 | (2,388) | 3.5 | % | (239) | (0.2) | % | (339) | 1.5 | % | |||||||||||||||||||||||||||||
| Effect of changes in federal tax laws or rates enacted in the current period | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Effect of cross-border tax laws: | ||||||||||||||||||||||||||||||||||||||
Subpart F6 | (12,270) | 17.9 | % | 28,377 | 27.0 | % | — | — | % | |||||||||||||||||||||||||||||
Net Controlled Foreign Corporation Tested Income7 | 1,336 | (1.9) | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
Tax on income from disregarded entities for US tax purposes8 | 2,006 | (2.9) | % | 193 | 0.2 | % | 275 | (1.2) | % | |||||||||||||||||||||||||||||
Federal tax credits9 | (9,091) | 13.3 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Changes in federal valuation allowance | 8,414 | (12.3) | % | (20,929) | (19.8) | % | 4,537 | (20.6) | % | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible federal items: | ||||||||||||||||||||||||||||||||||||||
Share based compensation10 | (14,445) | 21.1 | % | (3,421) | (3.3) | % | (18) | 0.1 | % | |||||||||||||||||||||||||||||
Executive compensation11 | 23,722 | (34.6) | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
Original issue discount12 | 3,265 | (4.8) | % | (96) | (0.1) | % | — | — | % | |||||||||||||||||||||||||||||
| Fair value change on redeemable common shares and puttable warrants | 714 | (1.0) | % | 3,204 | 3.0 | % | 5 | — | % | |||||||||||||||||||||||||||||
| Other | 1,230 | (1.8) | % | 209 | 0.2 | % | 192 | (0.9) | % | |||||||||||||||||||||||||||||
Changes in unrecognized tax benefits13 | 759 | (1.1) | % | 245 | 0.2 | % | — | — | % | |||||||||||||||||||||||||||||
| Effective tax rate | $ | 1,450 | (2.1) | % | $ | 3,095 | 2.9 | % | $ | (697) | 3.2 | % | ||||||||||||||||||||||||||
1.The majority of the expense in 2025, 2024 and 2023 relates to Illinois and Pennsylvania. The amount for 2025 includes R&D tax credits in New Jersey fully offset by a valuation allowance.
2.Relates to the statutory tax rate difference of 21% between Bermuda and the USA on the results of the BSX, which includes the income or loss on PYTH Tokens. On December 27, 2023 the Bermuda government enacted legislation into law, the Bermuda Corporate Income Tax Act 2023, which introduces a 15% corporate income tax (“CIT”) effective from January 1, 2025 that is applicable to Bermuda businesses that are part of multinational enterprise (“MNE”) groups with annual revenue of €750 million or more. The 15% CIT will not apply to the BSX for the first five years, under the exception for MNEs with limited international footprint.
3.Relates to the statutory tax rate difference of 6% between Guernsey and the USA on the post-acquisition results of TISE. Guernsey's Qualified Domestic Top-up Tax (DTT), designed to ensure a 15% minimum effective tax rate for large multinational enterprises under OECD Pillar Two rules, was enacted to be effective for financial years starting on or after January 1, 2025.
4.Relates to MIH East, the intermediate parent company of TISE before the shares were transferred to a US subsidiary of MIH Inc on November 5, 2025.
5.Mainly unrealized gain on TISE with no UK deferred tax because of UK substantial shareholding exemption.
6.The negative amount in 2025 mainly relates to a reduction in the deferred tax liability on the reduction on unrealized gains on PYTH Tokens held by BSX, with an offsetting amount in changes in valuation allowance.
7.Relates to TISE.
8.Relates to MIH East.
9.Relates to R&D tax credits and the amount in 2025 includes $7.0 million in respect of prior years.
10.This is the permanent difference between the tax deduction and the expense in the income statement for share options, RSAs and warrants.
11.Relates to IRC 162(m) which limits the deduction for compensation paid to a public company's top executives to $1 million per covered employee per year. The adjustment mainly relates to the accelerated vesting of RSAs triggered by the IPO, and the write off of the deferred tax asset on share awards for these employees.
12.Relates to the 2029 Senior Secured Term Loan and will have no impact in future years because the loan was repaid in 2025.
13.Includes penalties and interest accrued on unrecognized tax benefits.
The components of deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Federal and state net operating losses | $ | 70,551 | $ | 65,362 | |||||||
| Accrued expenses | 11,500 | 9,573 | |||||||||
| Interest carryforward | 24,137 | 6,484 | |||||||||
| Unexercised ERP warrants | 1,478 | 7,981 | |||||||||
| Stock based compensation | 14,608 | 24,924 | |||||||||
| R&D credits | 15,825 | 2,337 | |||||||||
| Depreciation and amortization | 5,220 | 7,747 | |||||||||
| Lease liability | 6,280 | 6,129 | |||||||||
| R&E capitalized expenses | — | 6,252 | |||||||||
| Other | 3,059 | 1,129 | |||||||||
| Gross deferred tax assets | 152,658 | 137,918 | |||||||||
| Valuation allowance | (109,161) | (93,644) | |||||||||
| Net deferred tax assets | 43,497 | 44,274 | |||||||||
| Unrealized gain on derivative assets | (3,135) | (23,294) | |||||||||
| Intangible assets and land | (37,905) | (26,206) | |||||||||
| Internally developed software | (11,996) | (1,240) | |||||||||
| Right of use asset | (4,150) | (4,300) | |||||||||
| Fixed assets | (3,136) | — | |||||||||
| Investments | (5,563) | — | |||||||||
| Deferred tax liabilities | (65,885) | (55,040) | |||||||||
| Net deferred tax liability | $ | (22,388) | $ | (10,766) | |||||||
The Company provides a valuation allowance against deferred tax assets if, based on management’s assessment of historical and projected future operating results and other available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Based on the Company's assessment at December 31, 2025 and 2024, which was based on historical operating results, the Company recorded a valuation allowance of $109.2 million and $93.6 million, respectively. The valuation allowance increased by $15.5 million in 2025 and decreased by $24.4 million in 2024. If the improvements in the U.S. operating results continue, the Company anticipates that, within the next 12 months, sufficient positive evidence should become available to reach a conclusion that a significant portion of the valuation allowance would no longer be required. The net deferred tax liability relates to the balance of the liability on indefinite lived assets that remains after being reduced by net operating losses carryforward, which are limited to 80% of the taxable income in any one period together with a deferred tax liability on the fair value adjustments related to the TISE acquisition. The deferred tax liability of $11.2 million arising on the TISE acquisition was the main driver for the increase in the net deferred tax liability.
There is no unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries and foreign corporate joint ventures as of December 31, 2025.
As of December 31, 2025, the Company had Federal net operating loss carryforwards of $257.6 million. Federal net operating losses in the amount of $33.7 million incurred for years ending on or before December 31, 2017 have a twenty year carryforward period. Those losses are set to expire between 2035 and 2037. Losses in the amount of $223.9 million incurred in years beginning on or after January 1, 2018 do not have an expiration period. While these losses will have an unlimited carryforward period, they will only be permitted to offset 80% of current taxable income.
As of December 31, 2024, the Company had Federal net operating loss carryforwards of $241.8 million. Federal net operating losses in the amount of $54.5 million incurred for years ending on or before December 31, 2017 have a twenty year carryforward period. Those losses are set to expire between 2033 and 2037. Losses in the amount of $187.3 million
incurred in years beginning on or after January 1, 2018 do not have an expiration period. While these losses will have an unlimited carryforward period, they will only be permitted to offset 80% of current taxable income.
As of December 31, 2025 and 2024, the Company had state net operating loss carryforwards of $244.7 million and $217.2 million, respectively. State net operating losses in the amount of $9.4 million can be carried forward indefinitely. The remaining $235.4 million will begin expiring in 2034.
As of December 31, 2025 the Company had federal and state R&D tax credit carryforwards of $10.8 million and $5.0 million, respectively, which both start to expire in 2028. As of December 31, 2024, the Company had federal R&D tax credit carryforwards of $2.3 million which start to expire in 2028.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, all of which would impact the effective tax rate, is as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Beginning balance of unrecognized tax benefits | $ | 2,219 | $ | 1,816 | $ | — | ||||||||||||||
| Additions based on tax positions taken in current year | 4,851 | 243 | 1,816 | |||||||||||||||||
| Additions based on tax positions taken in prior years | 706 | 160 | — | |||||||||||||||||
| Ending balance of unrecognized tax benefits | $ | 7,776 | $ | 2,219 | $ | 1,816 | ||||||||||||||
The Company recognizes penalties and interest accrued on unrecognized tax benefits as a component of income tax expense. In 2025, 2024 and 2023 the Company accrued $0.1 million, $0.1 million and nil, respectively, for interest and penalties. As of December 31, 2025 and 2024 accrued interest and penalties were $0.1 million and $0.1 million, respectively, recorded in non-current liabilities.
In the normal course of business, the Company is subject to examination in various tax jurisdictions. The major jurisdictions and their respective earliest open period subject to examination are as follows:
| Jurisdiction | Year | |||||||
| U.S. Federal | 2022 | |||||||
| U.S. State and Local Jurisdictions: | ||||||||
| Illinois | 2021 | |||||||
| New Jersey | 2022 | |||||||
| New York City | 2022 | |||||||
| New York State | 2022 | |||||||
| Pennsylvania | 2022 | |||||||
| Guernsey | 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.