NOVAVAX INCNVAX

NOVAVAX INC Income Taxes Disclosure

10-KFiled Feb 26, 20267 min read
Income Taxes
The Company’s income (loss) before income tax expense by jurisdiction is as follows (in thousands):
Year Ended December 31,
202520242023
Domestic$426,282 $(261,909)$(628,984)
Foreign15,885 85,294 85,953 
Income (loss) before income tax expense
$442,167 $(176,615)$(543,031)
Significant components of the current and deferred income tax expense (benefit) are as follows (in thousands):
Year Ended December 31,
202520242023
Current:
Domestic$— $— $(1,300)
State and local(26)43 (157)
Foreign1,908 12,264 1,445 
Total current income tax expense (benefit)
1,882 12,307 (12)
Deferred:
Foreign
(17)(1,423)2,043 
Total income tax expense$1,865 $10,884 $2,031 
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
Year Ended December 31, 2025
Amount
%
Statutory federal income tax expense$92,855 21 %
State and local income taxes, net of federal benefit(1)
155 — %
Foreign tax effects
Czech Republic
Non-taxable foreign currency adjustment
(4,845)(1)%
Other foreign tax jurisdictions
3,413 1 %
Effect of cross-border tax laws
Net controlled foreign corporation tested income
4,049 1 %
Other
416 — %
Changes in valuation allowance(101,100)(23)%
Non-taxable or non-deductible items
Share-based compensation(2)
5,443 1 %
Other
1,770 — %
Changes in unrecognized tax benefits(106)— %
Other adjustments(185)— %
Income tax expense
$1,865 — %
(1)    State and local income taxes in Maryland and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.
(2)     Amounts in this category include the tax impact of share-based compensation windfalls, shortfalls and option cancellations.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income (loss) before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
20242023
Statutory federal tax rate21 %21 %
State income taxes, net of federal benefit3 %1 %
Non-cash stock-based compensation(9)%(1)%
U.S. taxation of foreign operations(3)%(4)%
Cancellation of indebtedness
— %(1)%
Deferred tax asset write down
(13)%— %
Non-US tax credits
— %4 %
Other(6)%— %
Change in tax rate8 %— %
Change in valuation allowance(7)%(20)%
Income tax expense
(6)%— %
The Company’s income taxes paid, net of refunds received by jurisdiction for the year ended December 31, 2025 is as follows (in thousands):
Year Ended December 31, 2025
Federal
$— 
State
(15)
Foreign
Czech Republic
4,274 
India withholding tax
2,152 
Sweden
1,047 
Switzerland
1,075 
Other
273 
Income taxes paid (refunds received)
$8,806 
As of December 31, 2025, the Company has available federal, state, and foreign net operating losses of $2.6 billion, $824.1 million, and $10.9 million, respectively, that may be applied against future taxable income in the respective jurisdiction. The federal net operating losses of $2.6 billion may be carried forward indefinitely, except for $9.6 million which expires in 2037, limited to use equal to 80% of future annual federal taxable income. State net operating losses of $450.9 million have various expiration dates between 2028 and 2045. The remaining state and foreign net operating losses of $373.1 million and $10.9 million, respectively, can be carried forward indefinitely. The Company also has federal research tax credits of $50.9 million that will expire from 2026 through 2043 and a state research tax credit of $1.3 million that will expire from 2028 through 2030. Utilization of the federal and state net operating loss carryforwards and research tax credits may be subject to an annual limitation due to potential future ownership changes of the Company. As of December 31, 2025, the Company does not expect such limitation, if any, to impact the use of its net operating losses and research tax credits.
The Company files income tax returns in the U.S. federal jurisdiction and in various states, as well as in multiple foreign jurisdictions, including Sweden and the Czech Republic. The Company has U.S. federal and state net operating losses and credit carryforwards that are subject to examination from 2002 through 2024. The returns in Sweden are subject to examination from 2016 through 2025 and the returns for the Czech Republic are subject to examination from 2019 through 2025.
The significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows (in thousands):
December 31,
20252024
Deferred tax assets:
Federal, state, and foreign net operating loss carryforward
$587,824 $551,261 
Research tax credits50,919 51,343 
Lease liability 7,714 21,567 
Deferred revenue191,016 314,121 
Inventory reserve28,689 36,546 
Allowance for sales returns
— 13,397 
Non-cash stock-based compensation18,275 22,376 
Capitalized research costs118,111 152,046 
Other29,048 15,150 
Gross deferred tax assets1,031,596 1,177,807 
Valuation allowance(1,025,765)(1,135,559)
Total deferred tax assets$5,831 $42,248 
Deferred tax liabilities:
ROU assets$(5,199)$(37,159)
Fixed assets— (4,492)
Intangibles(1,087)(999)
Total deferred tax liabilities$(6,286)$(42,650)
Net deferred tax liabilities
$(455)$(402)
The Company has evaluated the positive and negative evidence bearing upon the realization of its deferred tax assets, including its history of significant losses in every year since inception except the current year and, in accordance with U.S GAAP, has fully reserved the net deferred tax assets. The Company concluded that realization of its net deferred tax assets is not more-likely-than-not to be realized as of December 31, 2025 and 2024. The valuation allowance decreased by $109.8 million and increased by $6.6 million for the years ended December 31, 2025 and 2024, respectively. The net change was due to the income (loss) before taxes generated in each year.
The net deferred tax liability of $0.5 million and $0.4 million at December 31, 2025 and 2024, respectively, is included within Other non-current liabilities on the consolidated balance sheets.
The Company recognizes the effect of an income tax position when it is more likely than not, based on the technical merits, that the income tax position will be sustained upon examination. A reconciliation of the beginning and ending amounts of unrecognized tax benefits in the year ended December 31, 2025, 2024, and 2023 is as follows (in thousands):
Year Ended December 31,
202520242023
Unrecognized tax benefits balance at January 1,
$4,100 $4,237 $5,194 
Additions for tax positions of current year— — 271 
Reductions for tax positions of prior year(106)(137)(1,228)
Unrecognized tax benefits balance at December 31,$3,994 $4,100 $4,237 

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2025 and 2024, the Company had no accruals or expenses for interest or penalties. The total amount of unrecognized tax benefits that, if recognized, could affect the effective tax rate was $4.0 million and $4.1 million as of December 31, 2025 and 2024, respectively. However, the Company maintains a full valuation allowance as of December 31, 2025 and 2024 and the recognition of any unrecognized tax benefits would be offset with a change in the valuation allowance and therefore there would be no income statement impact. As of December 31, 2025, the Company does not expect a significant change in the recorded unrecognized tax benefits liability balance during the next twelve months. The unrecognized tax benefits are presented in the financial statements as a reduction to the deferred tax assets for all periods.
In December 2025, the Company received a notification that the Internal Revenue Service has initiated an examination of the Company’s U.S. federal income tax return for the 2023 tax year. The examination is in its early stages.
On July 4, 2025, President Trump signed into federal law H.R. 1 – One Big Beautiful Bill Act (the “Act”). Included in the Act are several corporate federal income tax considerations that will be relevant to the Company, specifically with respect to tax depreciation for specified fixed asset additions, capitalization of R&D costs, the deductibility of interest expense and certain federal tax rules with respect to the taxation of international operations. The Act has not had a significant impact on the Company’s effective income tax rate and its net deferred federal income tax assets as the Company maintains a full valuation allowance.
In 2021, the Organization for Economic Cooperation and Development (“OECD”) developed guidance on Base Erosion and Profit Shifting (“BEPS”) Pillar Two Model Rules (“Pillar Two”), which addresses corporate tax planning strategies used by some large multinational corporations to shift profits from higher-tax jurisdictions to lower-tax jurisdictions or zero-tax locations. This guidance imposes a 15% minimum tax on the earnings of large multinational corporations. Pillar Two is effective in 2024 for the jurisdictions in which the Company operates. These rules have not had a significant impact on the Company’s effective tax rate or its consolidated financial statements.

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Feb 27, 2025
2023Feb 28, 2024
2022Feb 28, 2023
2021Mar 1, 2022
2020Mar 1, 2021
2019Mar 11, 2020
2018Mar 18, 2019
2017Mar 14, 2018
2016Feb 27, 2017
2015Feb 29, 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.

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