Navitas Semiconductor CorpNVTS
Navitas Semiconductor Corp Income Taxes Disclosure
PROVISION FOR INCOME TAXES
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA includes significant provisions, such as allowing for accelerated tax deductions for qualified property and research expenditures, and reinstating the use of earnings before interest, taxes, depreciation, and amortization in determining tax deductions related to business interest expense. In addition to the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, the OBBBA also modifies the international tax framework and restores favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.
U.S. and foreign components of loss before income taxes were (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| U.S. operations | $ | (90,236) | $ | 31,802 | |||||||
| Foreign operations | (26,667) | (120,648) | |||||||||
| Total loss before income taxes | $ | (116,903) | $ | (88,846) | |||||||
The components of the provision (benefit) for income taxes are as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Current benefit: | |||||||||||
| State | 22 | 11 | |||||||||
| Foreign | 67 | 242 | |||||||||
| Total current benefit | $ | 89 | $ | 253 | |||||||
| Deferred benefit: | |||||||||||
| Federal | $ | (49) | $ | (114) | |||||||
| State | (3) | (315) | |||||||||
| Foreign | 13 | (166) | |||||||||
| Total deferred benefit | $ | (39) | $ | (595) | |||||||
| Total | $ | 50 | $ | (342) | |||||||
Year Ended December 31, 2025 | |||||
| Income tax expense (benefit): | |||||
| Federal | $ | (49) | |||
| State | 19 | ||||
| Foreign | 80 | ||||
Total income tax expense (benefit) | $ | 50 | |||
Income taxes paid (net of refunds) for the year ended December 31, 2025, were as follows (in thousands):
Year Ended December 31, 2025 | |||||
| U.S. Federal | $ | — | |||
U.S. State | 5 | ||||
| China | 129 | ||||
| Taiwan | 106 | ||||
| Other Foreign | 3 | ||||
| Total | $ | 243 | |||
The provision (benefit) for income taxes differs from the amount that would result by applying the applicable federal income tax rate to income before income taxes, as follows (in thousands):
| Year Ended December 31, 2025 | |||||||||||
| US federal statutory income tax rate | $ | (24,550) | 21.0 | % | |||||||
| Domestic federal reconciling items | |||||||||||
| Nontaxable or nondeductible items | |||||||||||
| Non-deductible Stock Compensation | (1,421) | 1.2 | % | ||||||||
| Non-deductible Executive Compensation | 1,846 | (1.6) | % | ||||||||
| Gain/loss from Change in Fair Value of Earnout Liability | 2,609 | (2.2) | % | ||||||||
| Other | (432) | 0.4 | % | ||||||||
| Valuation Allowance | 7,261 | (6.2) | % | ||||||||
| Cross-border taxes | |||||||||||
| Global intangible low-taxed income | 87 | (0.1) | % | ||||||||
| Effect of the Future Foreign Branch Loss Reversal | 14,550 | (12.4) | % | ||||||||
Domestic state and local income taxes, net of federal effect1 | 19 | — | % | ||||||||
| Foreign reconciling items | |||||||||||
| Ireland | |||||||||||
Net Operating Loss2 | (5,795) | 5.0 | % | ||||||||
| Other | — | — | % | ||||||||
| Valuation Allowance | 5,795 | (5.0) | % | ||||||||
| Other Foreign Jurisdictions | |||||||||||
| Other | 81 | (0.1) | % | ||||||||
| Total | $ | 50 | — | % | |||||||
¹ The state of California makes up the majority (greater than 50%) of the state income tax benefit, net of federal income tax effect.
² The Company is generating a loss in both Ireland and U.S. due to its dual residency status.
For the year ended December 31, 2024, the provision (benefit) for income taxes differs from the amount that would result from applying the applicable federal income tax rate to income (loss) before income taxes, as follows:
Year Ended December 31, 2024 | |||||
| Provision computed at Federal statutory rate | 21.0 | % | |||
| Change in valuation allowance | (18.7) | % | |||
Effect of the Future Foreign Branch Loss Reversal | (20.5) | % | |||
| Foreign income tax rate and benefit | 16.6 | % | |||
| Effect of permanent differences | (0.2) | % | |||
| Non deductible executive compensation | (1.5) | % | |||
| Non deductible expenses - mark to market liabilities | 8.7 | % | |||
| Stock based compensation | (4.3) | % | |||
| State tax, net of federal | 0.3 | % | |||
| Other | (1.0) | % | |||
| Total | 0.4 | % | |||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2025 and 2024, deferred tax assets and liabilities consist of the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 121,046 | $ | 86,793 | |||||||
| Benefit of tax credit carry-forwards | 208 | 208 | |||||||||
| Start-up costs | 1,001 | 1,132 | |||||||||
| Capitalized research costs | 12,442 | 17,473 | |||||||||
| Stock compensation | 6,224 | 8,011 | |||||||||
| Lease Liabilities | 1,138 | 1,383 | |||||||||
| Other | 3,299 | 2,251 | |||||||||
| Valuation allowance | (67,264) | (50,444) | |||||||||
| $ | 78,094 | $ | 66,807 | ||||||||
| Deferred tax liabilities: | |||||||||||
| Right of Use Asset | (1,197) | (1,300) | |||||||||
| Depreciation | — | (53) | |||||||||
| Effect of the Future Foreign Branch Loss Reversal | (65,620) | (50,184) | |||||||||
| Intangibles | (11,682) | (15,711) | |||||||||
| $ | (78,499) | $ | (67,248) | ||||||||
| Net deferred tax balance | $ | (405) | $ | (441) | |||||||
During the fiscal year ended December 31, 2025, the valuation allowance increased by $16.8 million. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income. In the event that the Company determines, based on available evidence and management judgment, that all or part of the net deferred tax assets will not be realized in the future, the Company would record a valuation allowance in the period the determination is made.
In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with the Company’s expectations could have a material impact on its results of operations and financial position.
The Company has approximately $334.8 million of federal net operating loss (“NOL”) carryforwards and approximately $4.9 million of tax-effected state NOL carryforwards as of December 31, 2025. The federal NOLs expire in varying amounts through 2037, while the state NOLs expire in varying amounts through 2045. Federal NOLs arising from the years ended after December 31, 2017, may be carried forward indefinitely. Realization of the NOL carryforwards is dependent on the Company generating sufficient taxable income prior to expiration of the NOL carryforwards and these NOLs could also potentially be subject to usage limitations to the extent there are future changes in the Company’s ownership. As of December 31, 2025, the Company maintains a valuation allowance on the remaining deferred tax assets as the Company believes that it is not more likely than not that the deferred tax assets will be fully realized. The Company also has foreign net operating loss carryforwards of $365.8 million as of December 31, 2025. Of the foreign NOLs, $364.8 million are in Ireland and the deferred tax asset has a full valuation allowance as a result of the historical losses in the country.
The Company had no unrecognized tax benefits for the years ended December 31, 2025 or December 31, 2024. The Company recognizes interest and penalties related to unrecognized tax benefits in operating expenses. No such interest and penalties were recognized during the years ended December 31, 2025 and 2024.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 19, 2025 | |
| 2023 | Mar 6, 2024 | |
| 2022 | Apr 3, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 25, 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.