Savara Inc Income Taxes Disclosure

12. Income Taxes

The Company did not record a federal tax benefit or expense for the years ended December 31, 2025 and 2024. The Company recorded a minimal state provision for income taxes for the year ended December 31, 2024 and no state provision for income taxes for the year ended December 31, 2025 due to revenues below the minimum tax threshold. The components of the income tax expense are as follows for the years ended December 31, 2025 and 2024 (in thousands):

As noted above, we adopted ASU 2023-09 on a prospective basis effective January 1, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has established a valuation allowance due to uncertainties regarding the realization of deferred tax assets based upon the Company’s lack of earnings history. During the years ended December 31, 2025 and 2024, the valuation allowance increased by $35.4 million and $33.5 million, respectively.

The Company completed a Section 382 analysis to determine the amount of losses that are currently available for potential offset against future taxable income. Based on the analysis, it was determined that the utilization of the Company's NOLs and tax credit carryforwards generated in tax periods up to and including December 2019 are substantially limited and may result in the expiration of such carryforwards prior to utilization. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of 5% shareholders in the stock of a corporation by more than 50 percentage points in the aggregate over a three-year period. Since the Company's formation, it has raised capital through public and private issuance of common stock on several occasions which have ultimately resulted in multiple changes in ownership, as defined by Section 382. As of December 31, 2025 and 2024, the Company still has $53.9 million of federal Section 382 NOLs, collectively, which are included in the federal NOL carryforwards below, that are severely limited in future years.

As of December 31, 2025 and 2024, the Company had foreign NOL carryforwards of approximately $177.1 million and $137.7 million, respectively, which have an indefinite carryforward period. After taking the Section 382 limitations discussed into account, as of December 31, 2025 and 2024, the Company had NOLs for federal income tax purposes of approximately $195.3 million and $126.0 million, respectively. Federal NOL carryforwards of $5.2 million begin to expire in 2037, with $190.1 million not having an expiration date. As of December 31, 2025 and 2024, the Company had state NOL carryforwards of approximately $96.0 million and $25.3 million, respectively. The state NOL carryforwards begin to expire in 2037.

As of December 31, 2025 and 2024, the Company also had available research and orphan drug tax credit carryforwards for federal income tax purposes of approximately $30.2 million and $22.1 million, respectively. If not utilized, these carryforwards expire at various dates beginning in 2039. As of December 31, 2025 and 2024, the Company had state research and development tax credit carryforwards of approximately $0.5 million and $0.5 million, respectively, which will begin to expire in 2034 if not utilized.

Law Changes

On July 4, 2025, H.R. 1 – OBBBA, the One Big Beautiful Bill Act (“OBBBA”), was signed into law. Effective beginning in 2025, OBBBA provides for US tax law changes and modifications including the ability to deduct US based research and development expenditures, a more favorable interest expense limitation, the reinstatement of 100% bonus depreciation on qualified property and several changes to the US taxation of foreign activity. Given the Company’s history of net operating losses, OBBBA did not have a significant impact on the Company’s financial statements.

The Company applies the accounting guidance in ASC 740 Income Taxes related to accounting for uncertainty in income taxes. The Company’s reserves related to taxes are based on a determination of whether, and how much of, a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. As of December 31, 2025 and 2024, the Company had no unrecognized tax benefits. During the years ended December 31, 2025 and 2024, the Company had no interest and penalties related to income taxes.

The Company files income tax returns in the U.S. federal, state, and foreign jurisdictions. As of December 31, 2025, the statute of limitations for assessment by the Internal Revenue Service (“IRS”) is open for the 2020 and subsequent tax years, although carryforward attributes that were generated for tax years prior to then may still be adjusted upon examination by the IRS if they either have been, or will be, used in a future period. The 2020 and subsequent tax years remain open and subject to examination by the state taxing authorities. The 2021 and subsequent tax years remain open and subject to examination by the foreign taxing authorities. There are currently no federal, state, or foreign income tax audits in progress.

New Accounting Pronouncement Adoption

We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025: