Red Violet, Inc. Income Taxes Disclosure

8. Income taxes

Upon adoption of ASU No. 2023-09, as described in Note 2(r) above, the Company has elected to retrospectively adopt the guidance.

(1) State taxes in Florida and California made up the majority (greater than 50%) of the tax effect in this category.

As of December 31, 2025, the Company had gross federal and state net operating loss carryforwards of $14,371 and $12,249, respectively. Federal net operating losses have an indefinite life and do not expire. Certain state net operating losses of approximately $5,685 expire beginning in 2036 and the remaining could be carried forward indefinitely. As of December 31, 2025, the Company has $3,891 of research and development tax credits which begin to expire in 2041. The Company’s federal and state net operating losses, and research and development tax credits, are not subject to annual Section 382 limitations due to ownership changes that could impact the future realization.

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. On a periodic basis, management evaluates and determines the amount of valuation allowance required and adjusts such valuation allowance accordingly. The Company concluded that, due to its established historical cumulative positive income before income taxes plus permanent differences for the recent years, projections of future taxable income, and the reversal of taxable temporary differences, the realization of deferred tax assets as of December 31, 2025 was more likely than not.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the Company’s financial statements.

The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law, and new authoritative rulings. Due to the existence of net operating loss carryforwards since inception, all of the Company’s income tax filings remain open for tax examinations.

The Company does not have any unrecognized tax benefits as of December 31, 2025 and 2024.

On July 4, 2025, the OBBBA was enacted into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including the election for full expensing of domestic research and experimentation expenditures. Under ASC 740, the effects of changes in tax laws and rates on deferred tax balances are recognized in the period in which the legislation is enacted. The Company evaluated the impact of the OBBBA on its consolidated financial statements and concluded that it did not have a material impact.