Rocket Lab CorpRKLB
Rocket Lab Corp Income Taxes Disclosure
INCOME TAXES
The components of the pretax loss for the years ended December 31, 2025, 2024 and 2023 were as follows:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (346,045) | $ | (257,752) | $ | (205,334) | |||||||||||
| Foreign | 120,148 | 68,341 | 26,413 | ||||||||||||||
| Loss before provision for income taxes | $ | (225,897) | $ | (189,411) | $ | (178,921) | |||||||||||
The (benefit) provision for income taxes for the years ended December 31, 2025, 2024 and 2023 were as follows:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | 4 | 14 | (18) | ||||||||||||||
| Foreign | 2,714 | (299) | 3,270 | ||||||||||||||
| Total current provision | 2,718 | (285) | 3,252 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (27,825) | 166 | 114 | ||||||||||||||
| State | (4,291) | 280 | 452 | ||||||||||||||
| Foreign | 1,710 | 603 | (168) | ||||||||||||||
| Total deferred provision | (30,406) | 1,049 | 398 | ||||||||||||||
| Total: | |||||||||||||||||
| Federal | (27,825) | 166 | 114 | ||||||||||||||
| State | (4,287) | 294 | 434 | ||||||||||||||
| Foreign | 4,424 | 304 | 3,102 | ||||||||||||||
| (Benefit) provision for income taxes | $ | (27,688) | $ | 764 | $ | 3,650 | |||||||||||
The following is a reconciliation of the U.S. federal statutory federal income tax rate to our effective tax rate after adoption of ASU 2023-09:
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
| U.S. federal statutory income tax rate | $ | (47,438) | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect(1) | (3,387) | 1.5 | % | ||||||||
| Foreign tax effects | |||||||||||
| New Zealand | |||||||||||
| Statutory tax rate difference between New Zealand and United States | 7,340 | (3.2 | %) | ||||||||
| Nontaxable research and development tax incentive | (3,620) | 1.6 | % | ||||||||
| Stock-based payment awards | (21,733) | 9.6 | % | ||||||||
| Other | (36) | — | % | ||||||||
| Other foreign jurisdictions | 210 | (0.1 | %) | ||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | % | ||||||||
| Effect of cross-border tax laws | |||||||||||
| Global intangible low-taxed income | 2,964 | (1.3 | %) | ||||||||
| Other | 360 | (0.2 | %) | ||||||||
| Tax credits | — | — | % | ||||||||
| Changes in valuation allowances | 63,389 | (28.1 | %) | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Stock-based payment awards | (30,856) | 13.7 | % | ||||||||
Executive compensation(2) | 3,178 | (1.4 | %) | ||||||||
| Other | 37 | — | % | ||||||||
| Changes in unrecognized tax benefits | — | — | % | ||||||||
| Other adjustments | 1,904 | (0.8 | %) | ||||||||
| Effective tax rate | $ | (27,688) | 12.3 | % | |||||||
___________________________________________________
(1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California.
(2) Excess tax benefits on share-based payments exclude amounts associated with awards subject to the limitations imposed by Section 162(m) of the Internal Revenue Code.
The following is a reconciliation of the U.S. federal statutory federal income tax rate to our effective tax rate (in percentages):
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| Adjustments for tax effects of: | |||||||||||
| State taxes, net of federal benefit | 6.0 | % | 3.2 | % | |||||||
| Permanent differences and other | (2.6) | % | 0.4 | % | |||||||
| Uncertain tax positions | 1.0 | % | (0.7 | %) | |||||||
| Stock-based compensation | 6.7 | % | (0.5 | %) | |||||||
| Other adjustments to deferred taxes | 0.1 | % | 1.7 | % | |||||||
| Increase in valuation allowance | (32.6) | % | (27.1) | % | |||||||
| Provision for income taxes | (0.4) | % | (2.0 | %) | |||||||
The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows :
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued expenses | $ | 3,741 | $ | 2,751 | |||||||
| Inventories | 3,253 | 2,612 | |||||||||
| Deferred revenue | 40,635 | 13,681 | |||||||||
| Lease liability | 26,185 | 19,181 | |||||||||
| Stock compensation | 2,190 | 2,662 | |||||||||
| Interest expense | 5,886 | 3,798 | |||||||||
| Net operating losses | 210,532 | 129,601 | |||||||||
| Tax credits | 7,437 | 4,768 | |||||||||
| Reserves | 1,389 | 1,893 | |||||||||
| Capitalized research | 82,234 | 81,261 | |||||||||
| Other | 1,212 | 2,364 | |||||||||
| Total deferred tax assets | 384,694 | 264,572 | |||||||||
| Valuation allowance | (304,106) | (236,113) | |||||||||
| Total deferred tax assets, net | 80,588 | 28,459 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Right of use asset | (24,876) | (17,929) | |||||||||
| Depreciation and amortization | (55,059) | (8,411) | |||||||||
| Total deferred tax liabilities | (79,935) | (26,340) | |||||||||
| Net deferred tax assets | $ | 653 | $ | 2,119 | |||||||
A valuation allowance is recognized against deferred tax assets if it is more-likely-than-not that the deferred tax asset will not be realized. Because of the Company’s recent history of operating losses in the U.S., we have recorded a full valuation allowance against our U.S. deferred tax assets. As of December 31, 2025 and 2024, we recorded valuation allowances of $304,106 and $236,113, respectively. In 2025, the net increase in our valuation allowance primarily resulted from losses from operations, partially offset by the release of the valuation allowance related to the deferred tax liabilities generated from the GEOST acquisition.
The One Big Beautiful Bill Act (OBBB), enacted on July 4, 2025, restores or makes permanent certain expiring business tax provisions from the Tax Cuts and Jobs Act of 2017. Among these changes, the OBBB reinstated the immediate expensing of domestic research and experimental (R&E) costs; however, R&E expenditures attributable to foreign research will continue to be capitalized and amortized over 15 years. Due to the full valuation allowance against our U.S. deferred tax assets, the impact of this legislative change is immaterial to our financial statements.
The reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits for the years ended December 31, 2025 and 2024 is as follows:
| 2025 | 2024 | ||||||||||
| Balance at beginning of year | $ | 939 | $ | 4,887 | |||||||
| Decrease related to prior year tax positions | — | (1,974) | |||||||||
| Settlements | — | (1,974) | |||||||||
| Balance at end of year | $ | 939 | $ | 939 | |||||||
As of December 31, 2025 and 2024, the Company has unrecognized tax benefits totaling $140 and $140, respectively, which, if recognized, would impact the effective tax rate in future periods.
The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. As of December 31, 2025 and 2024, there were no accrued interest and penalties.
Due to net operating loss (“NOL”) carryforwards, the U.S. federal and state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years beginning with the year ended March 31, 2016. Our foreign subsidiaries are generally subject to examination within four years from the end of the tax year during which the tax return was filed. The years subject to audit may be extended if the entity substantially understates corporate income tax. The Company is not currently under examination by the IRS, foreign or state and local tax authorities.
At December 31, 2025 and 2024, the Company had federal NOL carryforwards of $840,916 and $492,496, respectively, which is comprised of definite and indefinite NOLs. The Company had definite federal NOL carryforwards of $57,135 as of December 31, 2025 and 2024, which begin to expire in varying amounts beginning in 2034. Federal NOLs generated after 2017 of $783,781 and $435,361 as of December 31, 2025 and 2024, respectively will carryforward indefinitely and are available to offset up to 80% of future taxable income each year. The Company also had state NOL carryforwards of $549,464 and $428,696 as of December 31, 2025 and 2024, respectively, available to reduce future taxable income, if any. If not realized, the state NOLs will begin to expire in varying amounts beginning in 2035.
Utilization of the net operating loss carryforwards may become subject to annual limitations due to ownership changes that could occur in the future as provided by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state and foreign provisions. These ownership changes may limit the amount of the net operating loss and tax credit carryforwards that can be utilized annually to offset future taxable income.
As of December 31, 2025 and 2024, we have undistributed earnings of our foreign subsidiaries of $64,552 and $43,266, respectively, which we have indefinitely reinvested and for which we have not recognized deferred taxes. The amount of unrecognized deferred taxes associated with these unremitted earnings would not be significant at December 31, 2025 and 2024.
The income taxes paid by jurisdiction or the year ended December 31, 2025 consisted of the following:
| Jurisdiction | Year Ended December 31, 2025 | |||||||
| Federal | $ | — | ||||||
| State | — | |||||||
| Foreign | 854 | |||||||
Canada | 756 | |||||||
New Zealand | 91 | |||||||
Other | 7 | |||||||
| Total | $ | 854 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 7, 2023 | |
| 2021 | Mar 24, 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.