Silvaco Group, Inc.SVCO
Silvaco Group, Inc. Income Taxes Disclosure
Income Taxes
The domestic and foreign components of the Company's loss before income tax provision were as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Domestic | $ | (46,751) | $ | (42,292) | |||||||
| Foreign | 2,106 | 3,372 | |||||||||
| Loss before income tax provision | $ | (44,645) | $ | (38,920) | |||||||
The components of the Company's income tax (benefit) provision were as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Current: | |||||||||||
| Federal | $ | 48 | $ | 56 | |||||||
| State | 7 | 36 | |||||||||
| Foreign | 417 | 303 | |||||||||
| Deferred: | |||||||||||
| Federal | (3,191) | — | |||||||||
| State | (425) | — | |||||||||
| Foreign | (295) | 89 | |||||||||
Income tax (benefit) provision | $ | (3,439) | $ | 484 | |||||||
During the year ended December 31, 2025, the Company recorded a U.S. deferred tax benefit which primarily relates to the partial release of the valuation allowance on the Company’s net deferred tax assets. Such partial release of the valuation allowance is primarily attributable to deferred liabilities recognized with the acquisitions of Tech-X and Mixel. Upon acquisition, the deferred tax liabilities reduce the Company’s net deferred tax asset balance and accordingly require a partial release of the valuation allowance with an offsetting income tax benefit.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities were as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Accruals and reserves | $ | 2,473 | $ | 3,436 | |||||||
| Depreciable and amortizable assets | 2,278 | 5,767 | |||||||||
| Net operating loss carryforward | 9,598 | 766 | |||||||||
| Tax credits | 9,411 | 8,279 | |||||||||
| Stock-based compensation expense | 455 | 492 | |||||||||
| Total deferred tax asset | $ | 24,215 | $ | 18,740 | |||||||
| Valuation Allowance | (24,026) | (18,621) | |||||||||
| Net deferred tax asset | $ | 189 | $ | 119 | |||||||
| Deferred tax liabilities | |||||||||||
| Revenue recognition | (189) | (414) | |||||||||
| Depreciable & Amortizable Assets | — | ||||||||||
| Net deferred tax liability | $ | — | $ | (295) | |||||||
The following is a reconciliation of the federal statutory income tax rate to the effective tax rate for the year ended December 31, 2025 pursuant to the disclosure requirements of ASU 2023-09 (in thousands, except percentages):
| Amount | Percent | ||||||||||
| U.S. Federal Statutory Tax Rate | $ | (9,368) | 21 | % | |||||||
State and Local Income Taxes, Net of Federal Income Tax Effect(1) | (532) | 1 | % | ||||||||
| Foreign Tax Effects | |||||||||||
| Other foreign jurisdictions | (296) | — | % | ||||||||
| Effect of Cross-Border Tax Laws | |||||||||||
| Global Intangible low-taxed income | 629 | (1) | % | ||||||||
| Tax Credits | |||||||||||
| Research and Development Tax Credits | (1,300) | 3 | % | ||||||||
| Changes in Valuation Allowances | 4,719 | (11) | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Non‑deductible stock-based compensation | 603 | (1) | % | ||||||||
| Non‑deductible officer's compensation | 470 | (1) | % | ||||||||
| Tax deficiencies on share-based payments | 596 | (1) | % | ||||||||
| Non-deductible Transaction Costs | 538 | (1) | % | ||||||||
| Other nondeductible items | 23 | — | % | ||||||||
| Worldwide Changes in Unrecognized Tax Benefits | 535 | (1) | % | ||||||||
| Other Adjustments | |||||||||||
| Other | (56) | — | % | ||||||||
| Effective Tax Rate | $ | (3,439) | 8 | % | |||||||
(1) State taxes in CA and ID made up the majority (greater than 50%) of the tax effect in this category
The following is a reconciliation of the federal statutory income tax rate to the Company's effective tax rate for the year ended December 31, 2024:
| December 31, | |||||||||||
| 2024 | |||||||||||
Tax at federal statutory rate | 21 | % | |||||||||
| Tax credits | 2 | % | |||||||||
| Other | (10) | % | |||||||||
| Valuation allowance | (14) | % | |||||||||
| Effective tax rate | (1) | % | |||||||||
The following is a summary of income taxes paid, net of refunds by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025:
United States - federal | $ | (257) | |||
United States - states and local | 11 | ||||
Total U.S. federal, state and local | (246) | ||||
Foreign | — | ||||
Total income taxes paid, net of refunds | $ | (246) | |||
Management establishes a valuation allowance for those deductible temporary differences when it is more likely than not that the benefit of such deferred tax assets will not be recognized. The ultimate realization of deferred tax assets is dependent upon the Company's ability to generate taxable income during periods in which the temporary differences become deductible. Management regularly reviews the deferred tax assets for recoverability and establishes a valuation allowance based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing temporary differences. Through the year ended December 31, 2025, management believes that it is more likely than not that the deferred tax assets will not be realized, such that a full valuation allowance has been recorded.
During the years ended December 31, 2025 and 2024, the valuation allowance increased by $5.4 million and $6.4 million, respectively.
As of December 31, 2025, the Company had net operating loss (“NOL”) carryforwards for federal income tax purposes of $39.2 million and federal research and development credits of $8.2 million which begin expiring in 2028.
As of December 31, 2025, the Company had net operating loss carryforwards for state income tax purposes of $16.3 million which begin expiring in 2034 and state research and development credits of $9.2 million which begin expiring in 2026.
The Company has not recorded a provision for deferred U.S. tax expense that could result from the remittance of foreign undistributed earnings since the Company intends to reinvest the earnings in its foreign subsidiaries indefinitely.
The following table summarizes the activity related to the Company's gross unrecognized tax benefits:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Balance as of January 1, | $ | 7,959 | $ | 7,247 | |||||||
| Increases related to prior year tax positions | — | — | |||||||||
| Increases related to current year tax positions | 719 | 712 | |||||||||
| Decreases related to prior year tax positions | — | — | |||||||||
| Balance as of December 31, | $ | 8,678 | $ | 7,959 | |||||||
The Company records unrecognized tax benefits, where appropriate, for all uncertain income tax positions. The Company recorded unrecognized tax benefits for uncertain tax positions of approximately $8.7 million as of December 31, 2025, of which $1.4 million, if recognized, would impact the effective tax rate.
The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. During the years ended December 31, 2025 and 2024, interest and penalties recorded in the consolidated statements of loss were each $22 thousand. The amounts of accrued interest and penalties recorded on the consolidated balance sheets as of December 31, 2025 and 2024 were $111 thousand and $99 thousand, respectively. The Company does not believe there will be material changes in its unrecognized tax positions over the next twelve months.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and certain foreign jurisdictions. The Company is not currently under audit by the Internal Revenue Service or other similar state, local, and foreign authorities. All tax years remain open to examination by major taxing jurisdictions to which the Company is subject for a period of 3 years for federal and 4 years for states, after the utilization of NOLs and credits.
The Company is not currently under audit for U.S. federal income tax or in any state tax jurisdiction. The statute of limitation for the U.S. federal income tax return is 3 years, and for most states is 5 years. The Company is also not under audit in any foreign jurisdiction. The statue of limitations for the foreign locations range from 3 years (China and France), to 10 years (Vietnam).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
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.