Marqeta, Inc.MQ
Marqeta, Inc. Income Taxes Disclosure
Income Taxes
The components of (loss) income before income taxes by tax jurisdiction were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (13,386) | $ | 28,872 | $ | (231,790) | |||||||||||
| Foreign | 57 | (792) | 1,215 | ||||||||||||||
| (Loss) income before income tax expense (benefit) | $ | (13,329) | $ | 28,080 | $ | (230,575) | |||||||||||
The components of income tax expense (benefit) were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current tax expense (benefit): | |||||||||||||||||
US federal | $ | — | $ | — | $ | — | |||||||||||
US state and local | 15 | 126 | 83 | ||||||||||||||
| Foreign | 853 | 569 | (139) | ||||||||||||||
Total current tax expense (benefit) | 868 | 695 | (56) | ||||||||||||||
Deferred tax (benefit) expense: | |||||||||||||||||
US federal | — | — | (6,347) | ||||||||||||||
US state and local | — | — | (2,025) | ||||||||||||||
| Foreign | (272) | 98 | 815 | ||||||||||||||
Total deferred tax (benefit) expense | (272) | 98 | (7,557) | ||||||||||||||
Total Income tax expense (benefit) | |||||||||||||||||
US federal | — | — | (6,347) | ||||||||||||||
US state and local | 15 | 126 | (1,942) | ||||||||||||||
| Foreign | 581 | 667 | 676 | ||||||||||||||
Total Income tax expense (benefit) | $ | 596 | $ | 793 | $ | (7,613) | |||||||||||
The Company adopted ASU 2023-09, “Improvements to Income Tax Disclosures” as of December 31, 2025 and the Company applied this guidance prospectively. Accordingly, the effective tax rate reconciliation for the year ended December 31, 2025 is presented in accordance with the new standard, while those for the years ended December 31, 2024 and 2023 are presented under the previous guidance and have not been retrospectively adjusted.
The reconciliation of the U.S. federal statutory rate to the Company's effective income tax rate for the year ended December 31, 2025 under ASU 2023-09 is as follows:
Year Ended December 31, 2025 | |||||||||||
Amount | Percent | ||||||||||
| US Federal Statutory Tax Rate | $ | (2,800) | 21.0 | % | |||||||
| Domestic Federal: | |||||||||||
| Tax Credits | |||||||||||
Research and development tax credits (1) | (2,410) | 18.1 | % | ||||||||
| Nontaxable or deductible Items | |||||||||||
| Executive compensation | 6,968 | (52.3) | % | ||||||||
| Share-based payment awards | 3,309 | (24.8) | % | ||||||||
| Non-deductible compensation | 619 | (4.6) | % | ||||||||
| Non-deductible M&A | 355 | (2.7) | % | ||||||||
| Other | 129 | (1.0) | % | ||||||||
| Change in Valuation Allowance | (6,158) | 46.2 | % | ||||||||
Domestic State and Local Income Taxes, Net of Federal Income Tax Effect (2) | 15 | (0.1) | % | ||||||||
| Foreign Tax Effects: | |||||||||||
| United Kingdom | |||||||||||
| Shared-based payment awards | 230 | (1.7) | % | ||||||||
| Other | 64 | (0.5) | % | ||||||||
| Canada | |||||||||||
| Non-deductible compensation | 508 | (3.8) | % | ||||||||
Research and development tax credits (1) | (494) | 3.7 | % | ||||||||
| Other | 132 | (1.0) | % | ||||||||
| Other Jurisdictions | |||||||||||
| Other | 129 | (1.0) | % | ||||||||
| Effective Tax Rate | $ | 596 | (4.5) | % | |||||||
(1) Presented net of related unrecognized tax benefits in the current year. Also includes immaterial changes in unrecognized tax benefits related to prior year tax positions.
(2) The tax effects attributable to state taxes in Oregon and Texas for the year ended December 31, 2025 represent the majority (greater than 50%) of the total in this category.
The reconciliation of the Company's effective tax rate to the statutory federal rate for the years ended December 31, 2024 and 2023 under the previous guidance is as follows:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Taxes at federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State taxes, net of federal effect | 5.9 | % | 6.5 | % | |||||||
| Share-based compensation | 14.0 | % | (3.1) | % | |||||||
Executive compensation | (77.2) | % | (11.0) | % | |||||||
Research and development credits | (32.5) | % | 17.0 | % | |||||||
Change in uncertain tax positions | 8.1 | % | (4.2) | % | |||||||
Mergers and acquisitions | 1.7 | % | 3.5 | % | |||||||
Nondeductible compensation | 33.3 | % | (7.4) | % | |||||||
| Other | 1.6 | % | (1.6) | % | |||||||
| Change in valuation allowance | 26.9 | % | (17.4) | % | |||||||
| Effective tax rate | 2.8 | % | 3.3 | % | |||||||
Income taxes paid by jurisdiction for the year ended December 31, 2025 are summarized as follows:
| December 31, 2025 | |||||
US Federal | $ | — | |||
US State and Local | 78 | ||||
Foreign | |||||
United Kingdom | 405 | ||||
Canada | 54 | ||||
Poland | 31 | ||||
Other | 27 | ||||
Total Foreign | 517 | ||||
Total | $ | 595 | |||
Deferred tax assets and liabilities consist of the following:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Federal and state net operating losses | $ | 53,398 | $ | 46,108 | |||||||
| Research and development credits | 40,008 | 34,556 | |||||||||
Research and development capitalization expenditures | 23,643 | 40,453 | |||||||||
| Accruals and other | 11,721 | 10,675 | |||||||||
| Share-based compensation | 5,137 | 8,087 | |||||||||
| Lease liability | 1,478 | 1,277 | |||||||||
| Property and equipment | 1,092 | 940 | |||||||||
| Deferred revenue | 635 | 1,174 | |||||||||
Reserve for contract contingencies and processing errors | — | 465 | |||||||||
| Total deferred tax assets | 137,112 | 143,735 | |||||||||
| Less valuation allowance | (129,569) | (135,697) | |||||||||
| Total deferred tax assets, net of valuation allowance | 7,543 | 8,038 | |||||||||
| Deferred tax liabilities: | |||||||||||
Intangibles | (8,845) | (7,061) | |||||||||
| Right-of-use asset | (1,159) | (581) | |||||||||
| Total deferred tax liabilities | (10,004) | (7,642) | |||||||||
Net deferred tax (liabilities) assets | $ | (2,461) | $ | 396 | |||||||
In accordance with ASC 740 and based on all available evidence on a jurisdictional basis, the Company believes that it is more likely than not that its U.S. deferred tax assets will not be utilized and has recorded a full valuation allowance against its net deferred tax assets in the U.S. jurisdiction. The Company assesses on a periodic basis the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including historical levels of income or losses and expectations and risks associated with estimates of future taxable income in assessing the need for the valuation allowance. If it is not more likely than not that the Company expects to recover its deferred tax assets, the Company will increase its provision for taxes by recording a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. The available negative evidence at December 31, 2025 and 2024 included historical and projected future operating losses. As a result, the Company concluded that a decrease of $6.1 million and an increase of $7.5 million was required to reflect the change in its deferred tax assets prior to valuation allowance during 2025 and 2024, respectively. As of December 31, 2025 and 2024, the Company considered it more likely than not that substantially all of its deferred tax assets would not be realized.
As of December 31, 2025, the Company had net operating loss carryforwards of approximately $205.2 million and $172.9 million for federal and state tax purposes, respectively. Of the Company's federal net operating loss carryforwards as of December 31, 2025, $180.3 million can be carried forward indefinitely but are limited to 80% of taxable income. If not utilized, the federal and state net operating carryforwards will begin to expire in 2035 and 2025, respectively.
In addition, the Company had research and development tax credit carryforwards of approximately $39.7 million for federal income tax purposes and $16.9 million for California state tax purposes. If not utilized, the federal research and development tax credit carryforwards will begin to expire in 2031. The California state research credit can be carried forward indefinitely.
Under Section 382 of the Internal Revenue Code of 1986, as amended, the Company's ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if the Company has experienced an ownership change. As of December 31, 2025, the Company has concluded that it has experienced ownership changes since inception and that its utilization of net operating loss carryforwards and other tax attributes will be subject to annual limitations.
The Company files federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. To the extent the Company has tax attributes carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the federal, state, or foreign tax authorities to the extent utilized in a future period.
The Company made an accounting policy election to provide for the Global Intangible Low-Taxed Income (GILTI) tax expense in the year the tax is incurred as a period cost. The Company elected and applied the tax law ordering approach when considering GILTI as part of its valuation allowance.
In July 2025, Congress passed and the President signed into law H.R. 1, the One Big Beautiful Bill Act (the "Tax Act"), which addresses certain business tax provisions enacted as a part of the 2017 Tax Cuts and Jobs Act including restoration of 100% bonus depreciation under Section 168(k) and Section 174 expensing for US-based research. Accounting Standards Codification Topic 740, Income Taxes, (“Topic 740”) requires the tax impacts to be included in the reporting period that includes the date the Tax Act was signed into law. As the Tax Act was enacted in the third quarter of fiscal year 2025, the Company reflected the impacts of the Tax Act in its income tax expense beginning in the third quarter of fiscal year 2025. Due to the Company's full valuation allowance on its deferred tax assets, these tax law changes did not have a significant effect on the Company's financial position or results of operations.
The Company recognizes tax benefits from uncertain tax positions only if the Company believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to the reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate.
A reconciliation of the total amounts of unrecognized tax benefits was as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Beginning balance | $ | 12,199 | $ | 9,800 | $ | — | |||||||||||
Additions based on uncertain tax positions related to the current period | 6,515 | 2,399 | 3,238 | ||||||||||||||
Additions based on uncertain tax positions related to the prior periods | 106 | — | 6,562 | ||||||||||||||
Ending balance | $ | 18,820 | $ | 12,199 | $ | 9,800 | |||||||||||
The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the Company’s tax provision for income tax expenses. During the year ended December 31, 2025, the Company accrued $0.3 million of interest and penalties related to unrecognized tax benefits.
As of December 31, 2025, the Company had gross unrecognized tax benefits of $18.8 million. If recognized, $4.6 million of unrecognized tax benefits would affect the Company's effective tax rate. The remaining $14.2 million would not impact the effective tax rate due to the offsetting effect of the Company's valuation allowance.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 11, 2022 | |
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.