Oscar Health, Inc.OSCR
Oscar Health, Inc. Income Taxes Disclosure
INCOME TAXES
The current income tax provision reflects the tax consequences of revenues and expenses currently taxable or deductible for the year reported. The deferred income tax provision or benefit reflects the differences between the financial and income tax reporting bases of the Company’s underlying assets and liabilities. The components of the provision for income taxes are as follows for the periods indicated:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Current income tax expense: | |||||||||||||||||
| U.S. Federal | $ | 3,060 | $ | 2,219 | $ | 3,222 | |||||||||||
| U.S. State and Local | 97 | 7,424 | 14 | ||||||||||||||
Total current income tax expense | $ | 3,157 | $ | 9,643 | $ | 3,236 | |||||||||||
Deferred income tax expense (benefit): | |||||||||||||||||
| U.S. Federal | $ | 38 | $ | 73 | $ | 58 | |||||||||||
| U.S. State and Local | 2,411 | (2,411) | — | ||||||||||||||
Total deferred income tax expense (benefit) | $ | 2,449 | $ | (2,338) | $ | 58 | |||||||||||
Total income tax expense | $ | 5,606 | $ | 7,305 | $ | 3,294 | |||||||||||
A reconciliation of the tax provision at the U.S. federal statutory tax rate to the provision for income taxes and the effective tax rate follows for the periods indicated:
| Years Ended December 31, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2025 | 2024 | 2023 | |||||||||||||||||||||||
Income (loss) before income taxes | $ | (437,297) | $ | 33,426 | $ | (267,300) | ||||||||||||||||||||
U.S. Federal Statutory Tax Rate | (91,832) | 21.00 | % | 7,019 | 21.00 | % | (56,133) | 21.00 | % | |||||||||||||||||
State income taxes, net of federal effect * | 1,981 | (0.45) | % | 3,960 | 11.85 | % | 11 | — | % | |||||||||||||||||
Change in valuation allowance | 84,573 | (19.34) | % | (1,861) | (5.57) | % | 32,898 | (12.31) | % | |||||||||||||||||
| Nontaxable and nondeductible items | ||||||||||||||||||||||||||
Share-based payment awards | (14,176) | 3.24 | % | (33,404) | (99.93) | % | 4,399 | (1.65) | % | |||||||||||||||||
Non-deductible compensation | 22,649 | (5.18) | % | 31,941 | 95.56 | % | 22,355 | (8.36) | % | |||||||||||||||||
| Other | 2,280 | (0.52) | % | 268 | 0.80 | % | 262 | (0.10) | % | |||||||||||||||||
| Interest in Partnership | (52) | 0.01 | % | (668) | (2.00) | % | 373 | (0.14) | % | |||||||||||||||||
Other | 183 | (0.04) | % | 50 | 0.15 | % | (871) | 0.33 | % | |||||||||||||||||
Total income tax | $ | 5,606 | (1.28) | % | $ | 7,305 | 21.86 | % | $ | 3,294 | (1.23) | % | ||||||||||||||
*State taxes in Florida in 2025, 2024, and 2023 contributed to the majority of the tax effect in the category.
Cash paid for income taxes, net of refunds, by jurisdiction is as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Income Taxes Paid | |||||||||||||||||
| U.S. Federal | $ | 3,500 | $ | 800 | $ | 2,400 | |||||||||||
| U.S. State and Local | |||||||||||||||||
| Florida | $ | 13,930 | * | * | |||||||||||||
| Texas | * | 60 | — | ||||||||||||||
| Pennsylvania | * | (216) | — | ||||||||||||||
Other | 86 | 30 | 14 | ||||||||||||||
Total Income Tax Paid | $ | 17,516 | $ | 674 | $ | 2,414 | |||||||||||
*The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
Deferred income tax assets and liabilities are recognized for the differences between the financial and income tax reporting bases of assets and liabilities based on enacted tax rates and laws. The components of deferred income tax assets and liabilities are as follows for the periods indicated:
| December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
Deferred Tax Assets: | |||||||||||
Net operating loss ("NOL") carryforwards | $ | 624,221 | $ | 525,056 | |||||||
| Deposit accounting | 37,794 | 15,330 | |||||||||
Claims reserves | 30,373 | 27,282 | |||||||||
Unearned premium reserve | 7,587 | 3,370 | |||||||||
Accrued bonus | 6,414 | 7,652 | |||||||||
Stock option | 2,402 | 2,824 | |||||||||
| Allowance for credit loss | 1,831 | 6,573 | |||||||||
Start-up costs | 1,739 | 2,364 | |||||||||
Fixed assets and capitalized software | — | 7,968 | |||||||||
| Unrealized losses | — | 383 | |||||||||
| Other | 14,149 | 5,932 | |||||||||
Total deferred tax assets before valuation allowance | 726,510 | 604,734 | |||||||||
Valuation allowance | 696,298 | 590,629 | |||||||||
Total deferred tax assets, net of valuation allowance | $ | 30,212 | $ | 14,105 | |||||||
Deferred Tax Liabilities: | |||||||||||
| Fixed assets and capitalized software | 9,953 | — | |||||||||
| Investments | 9,067 | 5,131 | |||||||||
Unrealized gains | 4,342 | 54 | |||||||||
Prepaid expenses | 3,419 | 3,204 | |||||||||
| Other | 2,841 | 2,676 | |||||||||
Total deferred tax liabilities | 29,622 | 11,065 | |||||||||
Net deferred tax assets | $ | 590 | $ | 3,040 | |||||||
Effective January 1, 2025, the Company adopted ASU 2023-09, which requires disaggregated information about the effective tax rate reconciliation and income taxes paid. The Company has elected to apply the amendments in this update retrospectively to all prior periods presented in these financial statements. Accordingly, certain prior-year amounts in the rate reconciliation and income taxes paid disclosures have been reclassified to conform to the current year's presentation.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which included among other provisions the restoration of immediate expensing of domestic research and experimental (“R&E”) expenditures under Section 174. Pursuant to the OBBBA’s transition rules, the Company elected to expense all unamortized domestic R&E costs previously capitalized between 2022 and 2024. As the Company maintains a valuation allowance against its net deferred tax assets, including NOLs, this election resulted in no change to tax expense for the year ended December 31, 2025.
The Company currently files income tax returns in the United States, various states, and localities. The majority of the Company’s operating subsidiaries are included in a consolidated federal income tax return. The Company began operations in 2012 and has never been placed under income tax audit. Federal tax returns are open for examination for tax years from 2022. State tax returns are open for examination for tax years from 2021.
The Company evaluates the need for a valuation allowance against its deferred tax assets considering all available positive and negative evidence. Based on its analysis, the Company concluded that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The Company has a valuation allowance of $696.3 million at December 31, 2025 against its deferred tax assets, including federal and state net operating losses, as the Company, with the exception of the year ended December 31, 2024, does not have a history of positive earnings. Valuation allowances will be provided until it becomes more likely than not that the benefit of the federal and state deferred tax assets will be realized.
Federal NOL carryovers are $2.6 billion, of which $1.5 billion expire beginning in 2035 through 2045, and $1.1 billion have indefinite carryforward periods. State NOL carryforwards from group filings are approximately $1.1 billion and from separate entity filings are $326.6 million; state NOL carryforwards expire beginning in 2035. Pursuant to I.R.C Section 382, the Company underwent a change in ownership in 2016. Based on the annual limitation, use of pre-change NOL carryforwards will not be limited prior to expiration.
The Company evaluates tax positions to determine whether the benefits are more likely than not to be sustained on audit based on technical merits. The Company did not have any uncertain tax positions for the years ended December 31, 2025, 2024, and 2023. The Company’s policy is to classify interest accrued related to unrecognized tax benefits in interest expense while penalties are included in income tax expense. The Company had no interest or penalties related to uncertain tax positions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 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.