Sight Sciences, Inc. Income Taxes Disclosure

Note 10. Income Taxes

The Company's components of income/(loss) before the provision for income taxes includes domestic loss of $38.9 million and $51.3 million for the years ended December 31, 2025 and 2024, respectively. Foreign income for the years ended December 31, 2025 and 2024 was $0.5 million and $0.1 million, respectively.

The Company adopted ASU No. 2023-09, Improvements to Income Tax Disclosure in fiscal year 2025 under the prospective method. Under this new standard, we disclose specific categories in the rate reconciliation and provide additional information for reconciling items of global pretax income.

Deferred tax assets and liabilities reflect the net tax effect of temporary differences between carrying value of assets and liabilities for financial reporting purposes and the tax basis of these assets and liabilities as measured by income tax law. The income tax effect of temporary differences that give rise to deferred tax assets and (liabilities) consist of the following (in thousands):

Internal Revenue Code (IRC) Section 382 limits the use of federal net operating losses and income tax credit carryforwards in certain situations where changes occur in stock ownership of a company. If the Company should have an ownership change of more than 50% of the value of the Company’s capital stock, utilization of the carryforwards could be restricted.

A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax assets will not be realized. As of each reporting date, the Company's management considers all evidence, both positive and negative, that could impact management's view with regard to future realization of deferred tax assets. As of December 31, 2025, a full valuation allowance for deferred tax assets was recorded as management believes it is not more likely than not that all of the deferred tax assets will be realized. At December 31, 2025 and 2024, the Company has a net operating loss carryforward for federal income tax purposes of approximately $323.3 million and $269.2 million, respectively. At December 31, 2025 and 2024, the Company has a net operating loss carryforward for state income tax purposes of approximately $266.9 million and $245.0 million, respectively. Of the Company's federal net operating loss carryovers, $14.8 million was generated before January 1, 2018 and is subject to a 20-year carryforward period. The remaining $308.5 million can be carried forward indefinitely but is subject to an 80% taxable income limitation. The pre-2018 federal and certain state net operating losses will begin to expire in 2031 and 2032, respectively, if not utilized.

As of December 31, 2025 and 2024, the Company has federal research and development income tax credit carryforwards of approximately $2.8 million and $2.8 million, respectively. As of December 31, 2025 and 2024, the Company has state research and development income tax credit carryforwards of approximately $2.4 million and $2.3 million, respectively. The Federal income tax credits begin to expire in 2033. The California research and development credits can be carried forward indefinitely. The total amount of uncertain tax positions ("UTP") on research and development tax credits is $1.2 million and $1.3 million as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company has business interest expense carryforwards of $0.8 million and $0.0 million, respectively. Business interest expense can be carried forward indefinitely.