Moderna, Inc.MRNA
Moderna, Inc. Income Taxes Disclosure
14. Income Taxes
Loss before income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following (in millions):
Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
United States | $ | (2,655) | $ | (3,697) | $ | (4,056) | |||||||||||
Foreign | (113) | 90 | 114 | ||||||||||||||
| Loss before income taxes | $ | (2,768) | $ | (3,607) | $ | (3,942) | |||||||||||
The provision for income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following components (in millions):
Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current: | |||||||||||||||||
| Federal | $ | 11 | $ | (57) | $ | (225) | |||||||||||
| State | 4 | (1) | 72 | ||||||||||||||
| Foreign | 29 | 13 | 24 | ||||||||||||||
| Total current | $ | 44 | $ | (45) | $ | (129) | |||||||||||
Deferred: | |||||||||||||||||
| Federal | $ | — | $ | — | $ | 888 | |||||||||||
| State | — | — | 8 | ||||||||||||||
| Foreign | 10 | (1) | 5 | ||||||||||||||
| Total deferred | 10 | (1) | 901 | ||||||||||||||
Total provision for (benefit from) income taxes | $ | 54 | $ | (46) | $ | 772 | |||||||||||
The reconciliation of the federal statutory income tax amount and rate to our effective tax rate for the year ended December 31, 2025 was as follows (in millions, except percentages):
Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| Federal statutory tax rate | $ | (581) | 21.0 | % | |||||||
State and local income tax, net of federal income tax effect | 3 | (0.2) | % | ||||||||
Foreign tax effects | 62 | (2.1) | % | ||||||||
Tax credits | (11) | 0.4 | % | ||||||||
Changes in valuation allowances | 509 | (18.4) | % | ||||||||
Nontaxable or nondeductible items | 2 | (0.1) | % | ||||||||
| Stock-based compensation windfall/shortfall | 43 | (1.6) | % | ||||||||
Changes in unrecognized tax benefits | 10 | (0.4) | % | ||||||||
Other | 17 | (0.6) | % | ||||||||
| Effective tax rate | $ | 54 | (2.0) | % | |||||||
The effective tax rate reconciliation for the year ended December 31, 2025 is presented in accordance with ASU 2023-09, while the effective tax rate reconciliations for the years ended December 31, 2024 and 2023 have not been recast and continue to be presented under the prior guidance. As a result of the adoption of ASU 2023-09, certain items in the effective tax rate reconciliation may have been reclassified between categories compared to prior periods; however, such reclassifications did not have a material impact on any individual line items or the overall effective tax rate.
The reconciliation of the federal statutory income tax rate to our effective tax rate for the years ended December 31, 2024 and 2023 was as follows:
Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal statutory tax rate | 21.0 | % | 21.0 | % | |||||||
Change in valuation allowance | (23.5) | % | (52.6) | % | |||||||
| Foreign-derived intangible income | — | % | 0.2 | % | |||||||
Stock-based compensation windfall/shortfall | 0.2 | % | 2.4 | % | |||||||
Federal research and development credits | 5.5 | % | 4.6 | % | |||||||
| State taxes, net of federal benefits | (0.7) | % | 5.7 | % | |||||||
| Non-deductible items | (0.4) | % | (0.4) | % | |||||||
Other | (0.8) | % | (0.5) | % | |||||||
Effective tax rate | 1.3 | % | (19.6) | % | |||||||
Our effective tax rate for the year ended December 31, 2025 was (2.0)% and was higher than the federal statutory tax rate, primarily due to our global valuation allowance, which limits our ability to recognize tax benefits from the loss. The higher effective tax rate was also impacted by certain of our foreign subsidiaries that have taxable income, while we incurred a net loss before income taxes in other jurisdictions. For the year ended December 31, 2024, the effective tax rate was lower than the federal statutory tax rate as a result of an increase in valuation allowance against deferred tax assets, which limited the recognition of tax benefits on our pre-tax loss. The tax benefits from research and development credits provided a partial offset. For the year ended December 31, 2023, despite being in a pre-tax loss position, our effective tax rate exceeded the federal statutory tax rate, primarily due to the establishment of a valuation allowance against the majority of the deferred tax assets, which resulted in a net tax expense rather than a benefit. This was partially offset by tax benefits from research and development credits and stock-based compensation.
For the year ended December 31, 2025, income taxes paid, net of refunds, by jurisdiction were immaterial both individually and in the aggregate and, accordingly, have not been separately disclosed.
Deferred income taxes reflect the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and the amounts used for income tax purposes, tax credit carryforwards and the tax effect of net operating loss carryforwards. Significant components of our deferred tax assets and tax liabilities as of December 31, 2025 and 2024 were as follows
(in millions):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 1,156 | $ | 424 | |||||||
| Stock-based compensation | 129 | 131 | |||||||||
| Capitalized licenses, research and development and start-up costs | 1,693 | 1,794 | |||||||||
| Tax credit carryforwards | 308 | 251 | |||||||||
| Operating lease liabilities | 134 | 138 | |||||||||
| Other comprehensive income | 3 | 4 | |||||||||
| Inventory reserve and capitalization | 152 | 205 | |||||||||
Wholesaler chargebacks, discounts and fees | 26 | 43 | |||||||||
Returns and other fees | 116 | 86 | |||||||||
Outside basis difference | 84 | 125 | |||||||||
| Other | 213 | 160 | |||||||||
| Total deferred tax assets | 4,014 | 3,361 | |||||||||
Less: valuation allowance | (3,738) | (3,084) | |||||||||
| Net deferred tax assets | $ | 276 | $ | 277 | |||||||
Deferred tax liabilities: | |||||||||||
| Right-of-use assets, operating | $ | (135) | $ | (139) | |||||||
| Property, plant and equipment | (58) | (55) | |||||||||
| Other | (23) | (16) | |||||||||
Total deferred tax liabilities | (216) | (210) | |||||||||
Net deferred tax assets | $ | 60 | $ | 67 | |||||||
The table below summarizes changes in the valuation allowance for deferred tax assets for the periods presented (in millions):
Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Valuation allowance at beginning of the period | $ | 3,084 | $ | 2,224 | $ | 155 | |||||||||||
| Increases to valuation allowance | 654 | 860 | 2,069 | ||||||||||||||
| Valuation allowance at December 31 | $ | 3,738 | $ | 3,084 | $ | 2,224 | |||||||||||
We periodically reassess the need for valuation allowances on our deferred tax assets, considering both positive and negative evidence to evaluate whether it is more likely than not that all or a portion of such assets will not be realized. During 2023, following the completion of our long-range financial planning process, we reassessed the evidence and concluded that a valuation allowance was necessary due to the preponderance of negative evidence, including:
•A pre-tax loss for the full year 2023, serving as a significant source of objectively verifiable negative evidence in accordance with ASC 740 (Income Taxes).
•A projected three-year cumulative loss resulting from our long-range financial planning process. This projection was due to a significant decrease in expected sales of our COVID vaccine as we transitioned to a seasonal market. Additionally, we anticipated substantial research and development expenses for our on-going Phase 3 clinical trials and to advance our product candidates into later-stage development. These factors contributed additional negative evidence with respect to the realizability of our deferred tax assets. The projections were based upon revenue from our approved drug product, which we believe can be reasonably estimated. In contrast, future taxable income projections from our investigational medicines are deemed inherently subjective and not objectively verifiable; they are insufficient to override negative evidence, and therefore, they were not assigned any weight in our valuation allowance analysis assessment.
Our evaluation also included whether there were other sources of taxable income that would allow us to realize our deferred tax assets, such as taxable income in carryback years, available tax planning strategies and the future reversals of taxable temporary differences. After assessing these strategies and all evidence, we determined it was more likely than not that we will not realize all of our deferred tax assets and therefore increased the valuation allowance by $2.1 billion during 2023.
In 2025 and 2024, we continued to maintain a global valuation allowance against the majority of our deferred tax assets, consistent with the assessment established in 2023. The valuation allowance reflects the ongoing preponderance of negative evidence, including continued and projected losses.
Significant management judgment is required in assessing the realizability of our deferred tax assets. In the event that actual results differ from our estimates, we adjust our estimates in future periods and we may need to modify our valuation allowance, which could materially impact our financial position and results of operations.
At December 31, 2025, we had $4.1 billion, $3.3 billion, and $89 million of federal, state and foreign net operating loss carryforwards, respectively, of which $4.1 billion, $1.6 billion, and $89 million respectively, will not expire and $1.7 billion of state net operating loss carryforwards will begin to expire in 2032. At December 31, 2025, we also had federal and state research and development tax credit carryforwards of $111 million and $208 million, respectively, the majority of which will begin to expire in 2030.
We recognize, in our financial statements, the effect of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. A reconciliation of the beginning and ending amounts of unrecognized tax benefits during the years ended December 31, 2025, 2024, and 2023 were as follows (in millions):
Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits at beginning of the period | $ | 240 | $ | 231 | $ | 128 | |||||||||||
| Decrease due to prior positions: | |||||||||||||||||
| Tax positions for prior years | (3) | (10) | — | ||||||||||||||
| Settlements with tax authorities | — | — | (27) | ||||||||||||||
| Increase due to current year tax positions: | |||||||||||||||||
| Additions based on tax positions for current year | 4 | 19 | 44 | ||||||||||||||
| Additions based on tax positions for prior years | — | — | 86 | ||||||||||||||
| Unrecognized tax benefits at end of the period | $ | 241 | $ | 240 | $ | 231 | |||||||||||
As of December 31, 2025, we had $241 million of net unrecognized tax benefits, which would affect our tax rate if recognized. Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. We do not anticipate a material change to our unrecognized tax benefits over the next twelve months that would have an adverse effect on our consolidated operating results. We recognize interest and penalties, if applicable, related to uncertain tax positions as a component of income tax expense.
We file income tax returns in U.S. and various state, local and foreign jurisdictions. The income tax returns of all material taxing jurisdictions remain open to tax examination for all tax years since our date of incorporation for those jurisdictions. We have federal, state, and foreign carryforward attributes generated in past years which may be adjusted upon examination. As of December 31, 2025, we are under audit in various U.S., and foreign jurisdictions; however, no adjustments to our tax positions have been proposed at this time.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Mar 13, 2019 | |
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.