SERA PROGNOSTICS, INC. Income Taxes Disclosure

14. Income Taxes

The Company has not recorded any income tax expense for the years ended December 31, 2025 and 2024 due to its history of operating losses. The loss from continuing operations before income tax consists of the following (in thousands):

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated is the cumulative loss incurred since inception. Such objective evidence limits the ability to consider other subjective evidence such as the Company’s projections for future growth.

On the basis of this evaluation, a full valuation allowance of $85.7 million and $78.1 million has been recorded as of December 31, 2025 and 2024, respectively, as it is more likely than not that the deferred tax assets will not be realized. The valuation allowance increased by $7.7 million and $13.2 million for the years ended December 31, 2025 and 2024, respectively, and there is no tax benefit presented in the accompanying financial statements.

The Company is subject to minimum taxes in several of the state jurisdictions where it files income tax returns. The amounts paid are immaterial and not presented above as a component of the current state tax provision. Besides these minimum state taxes, the Company did not pay any federal, state, or foreign taxes.

As of December 31, 2025, the Company had U.S. federal and state net operating loss carryforwards of approximately $275.8 million and $205.4 million, respectively. Of the federal amount, $205.5 million can be carried forward indefinitely, while the remainder begins to expire after 2028, if not utilized. The state amounts begin to expire at various dates after 2030.

Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of the Company’s NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. There are currently no federal or state tax audits in progress. All prior tax years remain subject to examination by Federal and State of Utah authorities due to the existence of net operating loss carryforwards.

The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities, based on technical merits. The reversal of the uncertain tax positions would not affect the Company’s effective tax rate to the extent that it continues to maintain a full valuation allowance against its deferred tax assets. As of December 31, 2025 and 2024, the Company did not record any material interest expense or penalties related to uncertain tax positions or the settlement of audits for prior periods. A reconciliation of the beginning and ending amount of uncertain tax positions (in thousands):