ONE Group Hospitality, Inc. Income Taxes Disclosure

Note 8 - Income Taxes

The components of loss before provision (benefit) for income taxes were as follows (in thousands):

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The components of the Company’s provision (benefit) for income taxes were as follows (in thousands):

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The Company’s effective tax rate differs from the statutory rates as follows:

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(1) For the year ending December 28, 2025 and December 31, 2024, state and local income taxes in California, Florida, and New York comprise the majority of the domestic state and local income taxes.

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The income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows (in thousands):

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Tax Carryforwards

As of December 28, 2025, the Company has federal net operating loss (“NOL”) carryforwards of $30.5 million which have no expiration date. As of December 28, 2025, the Company has federal FICA tip credit carryforwards of $57.2 million which have expiration dates from 2033 through 2046. The Company has various state NOL carryforwards. The determination of the state NOL carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards. As of December 28, 2025, the Company has $3.5 million in state NOL carryforwards after applying applicable apportionment percentages and tax rates. The state NOLs expire at various dates from 2037 to 2045.

In assessing the realizability of deferred tax assets, the Company evaluates whether it is more likely than not that the deferred tax assets will be realized. In the assessment of the valuation allowance, appropriate consideration was given to all positive and negative evidence including current operating results, tax planning strategies and forecasts of future earnings. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 28, 2025. As of December 28, 2025 and December 31, 2024, the Company had a valuation allowance of $75.1 million and $4.2 million, respectively.

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Uncertain tax positions

The following table summarizes the activity related to the Company’s uncertain tax positions (in thousands):

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Included in the balance of unrecognized tax benefits as of December 28, 2025 are tax benefits that, if recognized, would result in adjustments to taxes payable. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, we accrued interest of $0.2 million as of December 28, 2025 and December 31, 2024.

The Company is subject to income taxes in the U.S. federal jurisdiction, and the various states and local jurisdictions in which it operates. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company’s federal tax filings remain subject to examination for federal tax years 2022 through 2025. The Company’s state and local tax filings remain subject to examination for tax years 2021 through 2025. NOL carryforwards are subject to examination regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOLs generated as such NOLs are utilized.

The Company’s foreign income tax returns prior to fiscal year 2022 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.

The following table summarizes the Company’s income taxes paid, net of refunds, as of December 28, 2025 and December 31, 2024 (in thousands):

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