PINTEREST, INC.PINS
PINTEREST, INC. Income Taxes Disclosure
Income taxes
The components of income (loss) before provision for (benefit from) income taxes are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | 458,547 | $ | 317,169 | $ | 20,713 | |||||||||||
| Foreign | (12,657) | (29,564) | (37,153) | ||||||||||||||
Income (loss) before provision for (benefit from) income taxes | $ | 445,890 | $ | 287,605 | $ | (16,440) | |||||||||||
Provision for (benefit from) income taxes consists of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
Federal | $ | 149 | $ | 7,671 | $ | 7,833 | |||||||||||
State | 5,135 | 10,533 | 6,698 | ||||||||||||||
Foreign | 13,283 | 7,729 | 6,477 | ||||||||||||||
Total current tax expense | 18,567 | 25,933 | 21,008 | ||||||||||||||
| Deferred: | |||||||||||||||||
Federal | (301) | (1,434,298) | 6 | ||||||||||||||
State | 11,397 | (162,684) | 3 | ||||||||||||||
Foreign | (628) | (3,452) | (1,847) | ||||||||||||||
Total deferred tax expense (benefit) | 10,468 | (1,600,434) | (1,838) | ||||||||||||||
| Provision for (benefit from) income taxes | $ | 29,035 | $ | (1,574,501) | $ | 19,170 | |||||||||||
The table below includes a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective tax rate for the year ended December 31, 2025, after the adoption of ASU 2023-09 (in thousands, except percentages):
| Year Ended December 31, | ||||||||||||||
| 2025 | ||||||||||||||
Tax at U.S. statutory rate | $ | 93,637 | 21 | % | ||||||||||
State and local income taxes, net of benefit(1) | 13,203 | 3 | ||||||||||||
Effect of non-U.S. operations | 2,344 | 1 | ||||||||||||
Nondeductible and nontaxable items | ||||||||||||||
Share-based compensation | (4,606) | (1) | ||||||||||||
Other | 2,848 | 1 | ||||||||||||
Tax credits | ||||||||||||||
Research and development credit | (76,612) | (17) | ||||||||||||
Foreign tax credit | (2,352) | (1) | ||||||||||||
Changes in unrecognized tax benefits | 968 | — | ||||||||||||
Other | (395) | — | ||||||||||||
| Provision for (benefit from) income taxes | $ | 29,035 | 7 | % | ||||||||||
(1)The states and local jurisdiction that contribute to the majority (greater than 50%) in this category include Illinois, Texas, New York state and city, Pennsylvania and Columbus.
The table below includes a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective tax rate for the years ended December 31, 2024 and 2023, prior the adoption of ASU 2023-09 (in thousands):
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
Tax at U.S. statutory rate | $ | 60,397 | $ | (3,453) | ||||||||||
State income taxes, net of benefit | (120,204) | 5,111 | ||||||||||||
Foreign operations | 12,007 | 17,721 | ||||||||||||
Share-based compensation | (23,019) | (18,925) | ||||||||||||
Permanent book/tax differences | 1,171 | 692 | ||||||||||||
Change in valuation allowance | (1,421,323) | 111,497 | ||||||||||||
Tax credits | (83,587) | (93,887) | ||||||||||||
Other | 57 | 414 | ||||||||||||
| Provision for (benefit from) income taxes | $ | (1,574,501) | $ | 19,170 | ||||||||||
During the year ended December 31, 2025, the cash paid for income taxes by the Company were as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | ||||||||
| Federal | $ | 2,000 | ||||||
| State and local | ||||||||
| Texas | 1,152 | |||||||
| All other state and local | 5,276 | |||||||
| Foreign | ||||||||
| Brazil | 4,678 | |||||||
| Ireland | 3,098 | |||||||
| United Kingdom | 1,668 | |||||||
| All other foreign | 4,504 | |||||||
| Total income taxes paid, net of amounts refunded | $ | 22,376 | ||||||
The amount of cash paid for income taxes by the Company during the years ended December 31, 2024 and 2023 was $25.0 million and $19.2 million, respectively.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The legislation includes provisions that allow for the immediate expensing of domestic U.S. research and development expenses and other changes to the U.S. taxation of profits derived from foreign operations. The provisions of the OBBBA have multiple effective dates from 2025 through 2027. The changes effective in 2025 are included in our provision for income taxes for the year ended December 31, 2025 and were not material.
The primary difference between our effective tax rate and the U.S. federal statutory rate is the research and development credit partially offset by state tax expense for the year ended December 31, 2025. The primary difference between our effective tax rate and the U.S. federal statutory rate is the full valuation allowance we have established on our U.S. federal, state, excluding California, deferred tax assets for the year ended December 31, 2024.
Significant components of our deferred tax assets and liabilities are as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 569,975 | $ | 524,598 | |||||||
| Research tax credits | 786,586 | 677,104 | |||||||||
Reserves, accruals and other | 27,463 | 33,312 | |||||||||
Lease obligations | 50,331 | 41,493 | |||||||||
| Share-based compensation | 36,311 | 33,793 | |||||||||
| Research capitalization and amortization | 486,379 | 623,368 | |||||||||
| Total deferred tax assets | 1,957,045 | 1,933,668 | |||||||||
| Less: valuation allowance | (346,095) | (322,070) | |||||||||
| Deferred tax assets, net of valuation allowance | 1,610,950 | 1,611,598 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation and amortization | (15,838) | (6,394) | |||||||||
| Prepaid expenses | (2,959) | (2,665) | |||||||||
| Total deferred tax liabilities | (18,797) | (9,059) | |||||||||
| Deferred tax assets (liabilities) | $ | 1,592,153 | $ | 1,602,539 | |||||||
Due to uncertainty regarding realizability of our deferred tax assets in California, we believe that it is more likely than not that our California deferred tax assets will not be realizable as of December 31, 2025. Due to our history of losses, we believe it is more likely than not that our Irish deferred tax assets will not be realized as of December 31, 2025. Our valuation allowance increased by $24.0 million for the year ended December 31, 2025, primarily due to California tax credits generated during the year.
Given our current and anticipated future earnings, we believe that there is a reasonable possibility that sufficient positive evidence may become available to allow us to determine that the valuation allowance recorded against our Ireland deferred tax assets could be released within the next twelve months. The reversal would result in the recognition of Ireland deferred tax assets and a corresponding income tax benefit in the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on our actual operating results.
As of December 31, 2025, we had federal, California and other state net operating loss carryforwards of $2,160.6 million, $554.3 million and $956.4 million, respectively. Our federal carryforwards do not expire. If not utilized, our California and other state carryforwards will begin to expire in 2029 and 2026, respectively. Utilization of our net operating loss carryforwards may be subject to annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. Our net operating loss carryforwards could expire before utilization if subject to annual limitations. As of December 31, 2025, we had $198.2 million and $6.7 million of Irish and Other Foreign net operating loss carryforwards, respectively, that can be carried forward indefinitely.
As of December 31, 2025, we had federal, California, other state and foreign research and development credit carryforwards of $711.4 million, $490.0 million, $2.0 million and $3.4 million, respectively. If not utilized, our federal and foreign carryforwards will begin to expire in 2039, 2033 and 2043, respectively. Our California carryforwards do not expire.
Changes in gross unrecognized tax benefits were as follows (in thousands):
Gross Unrecognized Tax Benefits | |||||
| Balance as of December 31, 2023 | $ | 250,905 | |||
| Increases for tax positions of prior years | 6,545 | ||||
| Decreases for tax positions of prior years | (196) | ||||
| Increases for tax positions of current year | 56,819 | ||||
| Balance as of December 31, 2024 | $ | 314,073 | |||
| Increases for tax positions of prior years | 1,900 | ||||
| Decreases for tax positions of prior years | (38) | ||||
| Increases for tax positions of current year | 54,274 | ||||
| Balance as of December 31, 2025 | $ | 370,209 | |||
Recognizing the $370.2 million of gross unrecognized tax benefits we had as of December 31, 2025 would affect our effective tax rate by $219.4 million. The remaining $150.8 million of gross unrecognized tax benefits would be offset by the reversal of related deferred tax assets, which primarily are subject to a full valuation allowance. We recognize interest and penalties related to uncertain tax positions in provision for income taxes. Accrued interest and penalties are not material as of December 31, 2025 and 2024.
We are subject to taxation in the U.S. and various other state and foreign jurisdictions. As we have net operating loss carryforwards for U.S. federal and state jurisdictions, the statute of limitations is open for all tax years. For material foreign jurisdiction, the tax years open to examination include the years 2021 and forward.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 6, 2025 | |
| 2023 | Feb 8, 2024 | |
| 2022 | Feb 6, 2023 | |
| 2021 | Feb 3, 2022 | |
| 2020 | Feb 5, 2021 | |
| 2019 | Feb 7, 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.