OppFi Inc.OPFI
OppFi Inc. Income Taxes Disclosure
Income Taxes
The Company is the sole managing member of OppFi-LLC and, as a result, consolidates the financial results of OppFi-LLC. OppFi-LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, OppFi-LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by OppFi-LLC is passed through to and included in the taxable income or loss of its Members, including OppFi, on a pro rata basis. OppFi is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of OppFi-LLC, as well as any stand-alone income or loss generated by OppFi.
The following table summarizes income tax expense for the years ended December 31, 2025, 2024 and 2023 (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current income tax expense: | |||||||||||||||||
| Federal | $ | 4,008 | $ | 503 | $ | 27 | |||||||||||
| State | 1,118 | 248 | 480 | ||||||||||||||
| Total current income tax expense | 5,126 | 751 | 507 | ||||||||||||||
| Deferred income tax expense: | |||||||||||||||||
| Federal | 4,612 | 3,118 | 1,058 | ||||||||||||||
| State | 147 | 346 | 766 | ||||||||||||||
| Total deferred income tax expense | 4,759 | 3,464 | 1,824 | ||||||||||||||
| Total income tax expense | $ | 9,885 | $ | 4,215 | $ | 2,331 | |||||||||||
The following table summarizes the differences between the effective income tax rate and the federal statutory income tax rate of 21% for the years ended December 31, 2025, 2024 and 2023 (dollars in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 32,788 | 21.0 | % | $ | 18,491 | 21.0 | % | $ | 8,780 | 21.0 | % | ||||||||||||||
State and local income tax, net of federal income tax effect (1) | 1,094 | 0.7 | 590 | 0.6 | 1,239 | 3.0 | ||||||||||||||||||||
| Foreign tax effects | — | — | — | — | — | — | ||||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | — | — | — | — | ||||||||||||||||||||
| Effect of cross-border tax laws | — | — | — | — | — | — | ||||||||||||||||||||
| Tax credits | (241) | (0.1) | (104) | (0.1) | (72) | (0.2) | ||||||||||||||||||||
| Changes in valuation allowances | — | — | — | — | — | — | ||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||
| Issuance of warrants | 2,383 | 1.5 | 1,731 | 2.0 | 1,045 | 2.5 | ||||||||||||||||||||
| Others | (278) | (0.2) | (279) | (0.3) | 122 | 0.3 | ||||||||||||||||||||
| Changes in unrecognized tax benefits | 60 | — | 26 | — | 18 | — | ||||||||||||||||||||
| Effect of flow-through entity | (25,919) | (16.6) | (16,149) | (18.3) | (8,831) | (21.1) | ||||||||||||||||||||
| Other adjustments | (2) | — | (91) | (0.1) | 30 | 0.1 | ||||||||||||||||||||
| Effective tax rate | $ | 9,885 | 6.3 | % | $ | 4,215 | 4.8 | % | $ | 2,331 | 5.6 | % | ||||||||||||||
(1) For the year ended December 31, 2025, state income taxes in California, Florida, Illinois, Michigan, Minnesota, New Jersey, and Texas made up greater than 50% of the tax effect in this category. For the year ended December 31, 2024, state income taxes in Florida, Texas, and Virginia made up greater than 50% of the tax effect in this category. For the year ended December 31, 2023, state income taxes in California, Florida, Michigan, Tennessee, Texas, and Virginia made up greater than 50% of the tax effect in this category. | ||||||||||||||||||||||||||
The following table summarizes the income taxes paid for the years ended December 31, 2025, 2024, and 2023 (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | 5,389 | $ | 41 | $ | 54 | |||||||||||
| State | |||||||||||||||||
| Texas | * | 232 | * | ||||||||||||||
| North Carolina | * | 110 | * | ||||||||||||||
| Oregon | * | * | 14 | ||||||||||||||
| Other states | 704 | 92 | 5 | ||||||||||||||
| Total income taxes paid | $ | 6,093 | $ | 475 | $ | 73 | |||||||||||
* The amount of income taxes paid during the year did not meet the 5% disaggregation threshold. | |||||||||||||||||
Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of deferred tax asset as of December 31, 2025 and 2024 were as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Investment in partnership | $ | 21,727 | $ | 14,076 | |||||||
| Tax receivable agreement liability | 9,549 | 6,216 | |||||||||
| Accrued legal expense | 540 | — | |||||||||
| Intangibles | 447 | 479 | |||||||||
| Stock compensation | 192 | 107 | |||||||||
| Net operating loss | — | 366 | |||||||||
| Other | 192 | 96 | |||||||||
| Deferred tax asset | $ | 32,647 | $ | 21,340 | |||||||
As of December 31, 2025, OppFi had utilized all federal and state net operating loss carryovers from prior years. As of December 31, 2024, OppFi had approximately $1.3 million of federal net operating loss carryovers and $1.9 million of state net operating loss carryovers.
At the time of the Business Combination, OppFi recorded a deferred tax asset of $18.9 million with an offset to additional paid-in capital for the difference between the book value and the tax basis of OppFi’s investment in OppFi-LLC. As of December 31, 2025, the related deferred tax asset was $21.7 million. The increase was due to subsequent exchanges and differences between book and taxable income. Based on the Company’s cumulative earnings history and forecasted future sources of taxable income, the Company believes that it will be able to realize the deferred tax assets in the future. As the Company reassesses this position in the future, changes in cumulative earnings history, excluding non-recurring charges, or changes to forecasted taxable income may alter this expectation and may result in an increase in the valuation allowance and an increase in the effective tax rate.
In connection with the Business Combination, the Company entered into the TRA, which provides for payment to the Members of 90% of the U.S. federal, state and local income tax savings realized by the Company as a result of the increases in tax basis and certain other tax benefits related to the transactions contemplated under the Business Combination Agreement and the exchange of Retained OppFi Units for Class A Common Stock or cash. The Company has in effect an election under Section 754 of the Internal Revenue Code and will have such an election effective for each taxable year in which a redemption or exchange (including deemed exchange) of OppFi-LLC interests for shares of Class A Common Stock or cash occurs. The Company will retain the benefit of the remaining 10% of these cash savings. For the period from the closing date of the Company’s business combination through December 31, 2025, the TRA liability increased by $13.3 million (net of a $1.0 million payment) related to exchanges that occurred during that period. The increased expected benefit of the TRA payments resulted in an increase of the deferred tax asset of $3.3 million, with a net offsetting entry to additional paid-in capital and current period expense.
As of December 31, 2025 and 2024, OppFi had unrecognized tax benefit of $0.2 million and $0.1 million, respectively, related to research and development credits allocated from OppFi-LLC. FASB ASC 740, Income Taxes, prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2025 and 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The following table summarizes the change in unrecognized tax benefits as of December 31, 2025 and 2024 (in thousands):
| 2025 | 2024 | |||||||||||||
| Unrecognized tax benefits at beginning of the year | $ | 103 | $ | 38 | ||||||||||
| Additions based on tax positions related to the current year | 76 | 27 | ||||||||||||
| Additions for tax positions of prior years | 49 | 38 | ||||||||||||
| Reductions for tax positions of prior years | — | — | ||||||||||||
| Settlements with taxing authorities | — | — | ||||||||||||
| Other, net | — | — | ||||||||||||
| Net change in unrecognized tax benefits | 125 | 65 | ||||||||||||
| Unrecognized tax benefits at end of the year | $ | 228 | $ | 103 | ||||||||||
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA did not have a material impact on the Company’s income tax expense for the year ended December 31, 2025.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 27, 2024 | |
| 2022 | Mar 29, 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.