Progyny, Inc.PGNY
Progyny, Inc. Income Taxes Disclosure
Income Taxes
The components of income before income taxes were as follows (in thousands):
| Year Ended | ||||||||
| December 31, 2025 | ||||||||
Domestic | $ | 100,601 | ||||||
Foreign | (5,169) | |||||||
Income before income taxes | $ | 95,432 | ||||||
The provision for income taxes is composed of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 32,652 | $ | 27,342 | $ | 2,311 | |||||||||||
| State and local | 12,375 | 11,980 | 2,598 | ||||||||||||||
| Total current provision for income taxes | 45,027 | 39,322 | 4,909 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (6,903) | (6,836) | 4,433 | ||||||||||||||
| State and local | (1,212) | (3,620) | (688) | ||||||||||||||
| Total deferred (benefit) provision for income taxes | (8,115) | (10,456) | 3,745 | ||||||||||||||
| Total provision for income taxes | $ | 36,912 | $ | 28,866 | $ | 8,654 | |||||||||||
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate after the adoption of ASU No. 2023-09 is as follows (in thousands, except for percentages):
Year Ended | ||||||||||||||
| December 31, 2025 | ||||||||||||||
| Amount | Percent | |||||||||||||
| U.S. federal statutory income tax rate | $ | 20,041 | 21.0 | % | ||||||||||
State and local income tax, net of federal income tax effect(1) | 8,565 | 9.0 | ||||||||||||
| Foreign tax effects | ||||||||||||||
| Germany | ||||||||||||||
| Change in valuation allowance | 1,522 | 1.6 | ||||||||||||
| Other | (457) | (0.5) | ||||||||||||
| Other foreign jurisdictions | (145) | (0.2) | ||||||||||||
| Tax credits | ||||||||||||||
| Research and development tax credits | (2,057) | (2.2) | ||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||
| Share-based payment awards | 5,774 | 6.1 | ||||||||||||
| Executive compensation | 4,022 | 4.2 | ||||||||||||
| Changes in unrecognized tax benefits | 267 | 0.3 | ||||||||||||
| Other adjustments | (620) | (0.6) | ||||||||||||
| Effective tax rate | $ | 36,912 | 38.7 | % | ||||||||||
(1) State taxes in New York and California made up the majority (greater than 50 percent) of the tax effect in this category.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA includes various changes to U.S. federal income tax law, including extensions of several expiring provisions from the Tax Cuts and Jobs Act of 2017. The OBBBA has multiple effective dates, with certain provisions effective in 2025. The OBBBA did not have a material impact on the Company’s effective tax rate for the year ended December 31, 2025. The Company will continue to evaluate the impact of the new legislation on its consolidated financial statements as additional guidance is issued.
As previously disclosed for the years ended December 31, 2024 and 2023, a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate prior to the adoption of ASU No. 2023-09 is as follows (in percentages):
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Income tax provision at statutory rate | 21 | % | 21 | % | ||||||||||
| State income taxes, net of federal benefit | 7 | 2 | ||||||||||||
| Stock-based compensation | 2 | (18) | ||||||||||||
| Section 162(m) compensation limitation | 4 | 6 | ||||||||||||
| Other | 1 | 1 | ||||||||||||
| Effective tax rate | 35 | % | 12 | % | ||||||||||
The components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 7,064 | $ | 5,577 | |||||||
| Research and development capitalization | 295 | 1,989 | |||||||||
| Stock-based compensation | 73,300 | 60,738 | |||||||||
| Accruals and reserves | 15,817 | 18,354 | |||||||||
| Operating lease liabilities | 7,143 | 4,918 | |||||||||
| Depreciation and amortization | — | 185 | |||||||||
| Total deferred tax assets | 103,619 | 91,761 | |||||||||
| Valuation allowance | (3,121) | (1,779) | |||||||||
| Deferred tax assets after valuation allowance | $ | 100,498 | $ | 89,982 | |||||||
| Deferred tax liabilities: | |||||||||||
| Goodwill | $ | (746) | $ | (683) | |||||||
| Operating lease right-of-use assets | (6,396) | (4,352) | |||||||||
| Unrealized gain on marketable securities | (50) | (14) | |||||||||
Depreciation and amortization | (293) | — | |||||||||
| Total deferred tax liabilities | (7,485) | (5,049) | |||||||||
| Net deferred tax assets | $ | 93,013 | $ | 84,933 | |||||||
Assessing the realizability of deferred tax assets requires determination of whether it is more-likely-than-not that some portion or all the deferred tax assets will not be realized. In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carry back and tax-planning strategies. The valuation allowance increased by $1.3 million during the year ended December 31, 2025. As of December 31, 2025, management believes there is sufficient positive evidence to conclude that it is more likely than not that substantially all the net deferred tax assets were realizable.
As of December 31, 2025, the Company has U.S. federal net operating loss carryforwards of $1.1 million which expire in the year 2030 and U.S. state net operating loss carryforwards of $51.3 million, which will begin to expire in the year 2038. In addition, the Company has foreign net operating loss carryforwards of $10.9 million, which will begin to expire in the year 2041. Utilization of the U.S. federal net operating loss carryforwards may be subject to an annual limitation due to ownership changes, as provided by Section 382 of the Internal Revenue Code. Such annual limitation could result in the expiration of net operating losses before their utilization.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at the beginning of the year | $ | 603 | $ | 390 | $ | 390 | |||||||||||
| Additions based upon tax positions related to the current year | 277 | 213 | — | ||||||||||||||
Reductions based upon tax positions related to the prior year | (54) | — | — | ||||||||||||||
| Balance at the end of the year | $ | 826 | $ | 603 | $ | 390 | |||||||||||
For the years ended December 31, 2025, 2024, and 2023, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $0.8 million, $0.6 million, and $0.4 million, in the aggregate, respectively. The Company classifies interest and penalties related to unrecognized tax benefits as components of the provision for income taxes. As of December 31, 2025, 2024, and 2023, the Company had no significant accrued interest or penalties related to unrecognized tax benefits and no amounts have been recognized in the Company’s consolidated statements of operations. The Company does not anticipate any material change in its unrecognized tax benefits over the next twelve months.
The Company files income tax returns in the U.S. for federal and state and local jurisdictions, as well as in certain foreign jurisdictions, with varying statutes of limitations. The Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2020. However, to the extent the Company generated net operating losses or tax credits in closed tax years, future use of the net operating losses or tax credit carryforward balances would be subject to examination within the relevant statute of limitations for the year in which utilized.
Cash paid for income taxes, net of refunds received, were as follows (in thousands):
Year Ended | ||||||||
| December 31, 2025 | ||||||||
| Federal | $ | 40,530 | ||||||
| State | ||||||||
| California | 2,900 | |||||||
| New York | 2,920 | |||||||
| Other states | 9,140 | |||||||
| Total cash paid for income taxes, net of refunds received | $ | 55,490 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 10, 2020 | |
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.