Vaxcyte, Inc.PCVX
Vaxcyte, Inc. Income Taxes Disclosure
Income Taxes
______________________________________________________________
Our loss before income taxes was primarily derived from our business operations within the United States.
The Company has not recognized a current or deferred tax expense/(benefit) for federal, state or foreign jurisdictions in the years ending December 31, 2025, 2024 or 2023, respectively, due to tax losses in the various jurisdictions.
There were no federal, state, local or foreign income taxes paid, net of refunds, for the years ended December 31, 2025, 2024 or 2023.
The differences between income tax expected at the U.S. federal statutory income tax rate of 21% and the reported income tax rate are summarized as follows:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | % | 2024 | % | 2023 | % | ||||||||||||||||||||||||||||||
| (In Thousands, Except for Percentages) | |||||||||||||||||||||||||||||||||||
| Loss from continuing operations | |||||||||||||||||||||||||||||||||||
| U.S. Federal Statutory Tax Rate | $ | (160,792) | 21.0 | % | $ | (97,425) | 21.0 | % | $ | (84,476) | 21.0 | % | |||||||||||||||||||||||
State and Local Income Taxes, Net of Federal Income Tax Effect (1) | (29) | — | % | 65 | — | % | 39 | — | % | ||||||||||||||||||||||||||
| Effect of Cross-Border Tax Laws | |||||||||||||||||||||||||||||||||||
| Global intangible low-taxed income | 11,407 | (1.5) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Tax Credits | |||||||||||||||||||||||||||||||||||
| Research and Development tax credits | (8,706) | 1.1 | % | (11,297) | 2.4 | % | (6,644) | 1.6 | % | ||||||||||||||||||||||||||
| Change in Valuation Allowance | 139,663 | (18.2) | % | 108,613 | (23.4) | % | 87,744 | (21.8) | % | ||||||||||||||||||||||||||
| Nondeductible/Non-taxable Items | |||||||||||||||||||||||||||||||||||
| Stock Based Compensation | 3,089 | (0.4) | % | (18,483) | 4.0 | % | (1,668) | 0.4 | % | ||||||||||||||||||||||||||
| Section 162(m) Limitation | 12,103 | (1.6) | % | 16,420 | (3.5) | % | 4,525 | (1.1) | % | ||||||||||||||||||||||||||
Other (2) | 3,265 | (0.4) | % | 2,107 | (0.5) | % | 480 | (0.1) | % | ||||||||||||||||||||||||||
| Effective Tax Rate | $ | — | — | % | $ | — | — | % | $ | — | — | % | |||||||||||||||||||||||
(1) State taxes in California represented the majority (greater than 50%) of the tax effect within this category.
(2) Other includes immaterial foreign tax effects and immaterial worldwide changes in unrecognized tax benefits in the years ending December 31, 2025, 2024 and 2023.
There was no impact from the changes in tax laws, tax rates or cross-border tax regulations enacted for the years ended December 31, 2025, 2024 or 2023.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents significant components of our deferred tax assets and liabilities as of December 31, 2025 and 2024:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
(in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Net operating losses | $ | 336,106 | $ | 195,869 | |||||||
| Unrealized gain/loss | — | 3,465 | |||||||||
| Accrued and others | 6,471 | 14,637 | |||||||||
| R&D Credits | 38,272 | 26,709 | |||||||||
| Capitalized R&D expenditures | 221,258 | 155,356 | |||||||||
| Accrued manufacturing expenses | 471 | 6,909 | |||||||||
| Lease liability | 35,114 | 21,228 | |||||||||
| Intangible assets | 27,337 | 29,253 | |||||||||
| Stock compensation | 22,800 | 14,652 | |||||||||
| Capitalized Interest | 732 | — | |||||||||
| Total deferred tax assets | 688,561 | 468,078 | |||||||||
| Less: Valuation allowance | (645,313) | (446,098) | |||||||||
| Net deferred tax asset | 43,248 | 21,980 | |||||||||
| Deferred tax liabilities: | |||||||||||
| ROU asset | (34,674) | (21,524) | |||||||||
Fixed Assets | (1,295) | (456) | |||||||||
| Unrealized gain/loss | (7,279) | — | |||||||||
| Total deferred tax liabilities | (43,248) | (21,980) | |||||||||
| Net deferred taxes | $ | — | $ | — | |||||||
At December 31, 2025, we have net operating loss (“NOL”) carryforwards of approximately $796.1 million and $1,907.7 million available to reduce future taxable income, if any, for federal and state income tax purposes, respectively. The federal and state NOL carryforwards, except the federal loss carryforward arising in tax years beginning after December 31, 2017, begin to expire in 2034 unless previously utilized. Federal NOLs arising in tax years beginning after December 31, 2017 have an indefinite carryover period and do not expire. Our state NOL carryforwards generally have a 20-year carryover period. We had no foreign NOL carryforwards at December 31, 2025.
At December 31, 2025, we have research credit carryforwards of $40.3 million and $12.3 million available to offset future income tax liabilities, if any, for federal and California income tax purposes, respectively. The federal research and development tax credit carryforwards expire beginning in 2039 unless previously utilized. The California tax credits can be carried forward indefinitely.
Utilization of the NOL and research credit carryforward may be subject to an annual limitation due to the ownership percentage change limitations under Section 382 and Section 383, respectively, provided by the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions. The annual limitation may result in the expiration of the NOL before utilization. We have experienced ownership changes in the past. There were no ownership changes identified in 2025, as such we determined that no federal research credits will expire unutilized or are excluded from our research credit carryforwards. Subsequent ownership changes may affect the limitation in future years.
We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. Based on our history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred tax assets will not be realized. Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2025 and 2024.
We have uncertain tax benefits (“UTBs”) totaling $14.0 million and $9.5 million as of December 31, 2025 and 2024, respectively, which were netted against deferred tax assets subject to valuation allowance. The UTBs had no effect on the effective tax rate. We recognize interest and penalties related to UTBs, when they occur, as a component of income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the provision for income taxes in the period such determination is made. There were no interest or penalties recognized for the years ended December 31, 2025 or 2024. We do not expect our UTBs to change significantly over the next 12 months.
A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows:
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Balance at the beginning of the year | $ | 9,525 | $ | 4,447 | $ | 1,754 | |||||||||||
| Additions based on tax positions related to current year | 4,316 | 5,166 | 2,208 | ||||||||||||||
| Additions based on tax positions related to prior years | 195 | — | 485 | ||||||||||||||
| Reductions based on tax positions related to prior years | — | (88) | — | ||||||||||||||
| Balance at end of year | $ | 14,036 | $ | 9,525 | $ | 4,447 | |||||||||||
We file U.S. federal, state and foreign tax returns in certain jurisdictions in which we operate as required. In general, we are no longer subject to tax examination by the Internal Revenue Service or state taxing authorities for years before 2019. Although the federal and state statutes are closed for purposes of assessing additional income tax in those prior years, the taxing authorities may still make adjustments to the NOL and credit carryforwards used in open years. Therefore, the tax statutes should be considered open as it relates to the NOL and credit carryforwards used in open years. Our Swiss corporate income and capital tax returns are subject to examination by the Swiss tax authorities for five years after the end of the corresponding tax period. We do not have any tax audits or other issues pending.
It is our intention to reinvest the earnings of our non-U.S. subsidiary in those operations and not to repatriate the earnings to the United States. Accordingly, we do not provide for deferred taxes on differences between financial reporting and tax basis in our investments in foreign subsidiaries as they are considered permanent in duration or are not expected to reverse in the foreseeable future. As of December 31, 2025, there are no unremitted earnings of our foreign subsidiary.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the United States, and contains a wide range of tax reform provisions, including extending and modifying certain key Tax Act provisions, such as 100% bonus depreciation and the business interest expense limitation. Additionally, the OBBBA repealed mandatory capitalization and amortization of domestic R&D expenses, reverting to the immediate expensing of R&D expenditures for tax years beginning in 2025. The enactment of this legislation did not have a material impact on our consolidated financial statements, effective income tax rate, or cash tax position for the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 29, 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.