TANDEM DIABETES CARE INCTNDM
TANDEM DIABETES CARE INC Income Taxes Disclosure
Income Taxes
The loss before provision for income taxes for the Company’s operations was as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (226,958) | $ | (78,156) | $ | (135,411) | |||||||||||
| Foreign | 26,686 | (13,714) | (84,843) | ||||||||||||||
Loss before provision for income taxes | $ | (200,272) | $ | (91,870) | $ | (220,254) | |||||||||||
The components of income tax expense were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 461 | $ | 636 | $ | 308 | |||||||||||
| State | 27 | 1,143 | 345 | ||||||||||||||
| Foreign | 3,950 | 2,376 | 1,704 | ||||||||||||||
Total current tax expense | 4,438 | 4,155 | 2,357 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | — | — | — | ||||||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total deferred income tax benefit | — | — | — | ||||||||||||||
| Income tax expense | $ | 4,438 | $ | 4,155 | $ | 2,357 | |||||||||||
The expense for income taxes reconciles to the amount computed by applying the federal statutory rate to loss before taxes as follows (in thousands):
Year Ended December 31, 2025 | |||||||||||
$ | % | ||||||||||
Income tax benefit at federal statutory rate (1) | $ | (42,057) | 21.00 | % | |||||||
State income tax, net of federal benefit(2) | (1,038) | 0.52 | % | ||||||||
Foreign tax effects | |||||||||||
Switzerland | |||||||||||
Foreign rate differential | (3,041) | 1.52 | % | ||||||||
Changes in valuation allowance | (7,037) | 3.51 | % | ||||||||
Other tax effects | 166 | (0.08) | % | ||||||||
Other foreign jurisdictions | (1,722) | 0.86 | % | ||||||||
Effect of changes in tax laws or rates enacted in the current period | — | — | % | ||||||||
Effect of cross-border tax laws | |||||||||||
Subpart F income inclusion | 348 | (0.17) | % | ||||||||
Tax credits | |||||||||||
Research and development credits | (10,370) | 5.18 | % | ||||||||
Foreign tax credits | (2,667) | 1.33 | % | ||||||||
Changes in valuation allowance | 54,580 | (27.25) | % | ||||||||
Nontaxable or nondeductible items | |||||||||||
Non-deductible stock-based compensation | 3,952 | (1.97) | % | ||||||||
Other non-deductible and non-taxable | (103) | 0.05 | % | ||||||||
Other | |||||||||||
Stock-based compensation - (windfall) shortfall | 11,542 | (5.76) | % | ||||||||
Net impact on liquidation of foreign subsidiary | (17,262) | 8.62 | % | ||||||||
Other | 1,850 | (0.94) | % | ||||||||
Changes in unrecognized tax benefits | 17,297 | (8.64) | % | ||||||||
Income tax expense | $ | 4,438 | (2.22) | % | |||||||
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
Income tax benefit at federal statutory rate (1) | $ | (19,293) | $ | (46,253) | ||||||||||
| State income tax, net of federal benefit | (1,444) | (1,313) | ||||||||||||
Convertible debt repurchase transaction | 1,658 | — | ||||||||||||
| Research and development credits | (7,865) | (6,283) | ||||||||||||
| Section 382 limitation | — | (5) | ||||||||||||
| Stock-based compensation | 5,772 | 14,904 | ||||||||||||
| Officers' compensation | 1,043 | 1,547 | ||||||||||||
Recognition of acquired deferred tax assets | — | (5,048) | ||||||||||||
| Acquired IPR&D expenses | — | 14,938 | ||||||||||||
Cross-border tax impacts | (1,422) | (307) | ||||||||||||
Foreign rate differential | 2,075 | 7 | ||||||||||||
| Other | 1,159 | 1,374 | ||||||||||||
| Change in valuation allowance | 22,472 | 28,796 | ||||||||||||
Income tax expense | $ | 4,155 | $ | 2,357 | ||||||||||
(1)For the years ended December 31, 2025, 2024 and 2023, the U.S. federal statutory tax rate was 21%.
(2)The state of California comprises greater than 50% of our state tax benefit.
The amounts of cash income taxes paid, net of refunds received, by the Company are as follows:
| Year Ended December 31, | |||||
| 2025 | |||||
Federal | $ | 2,246 | |||
State | |||||
Illinois | 353 | ||||
Other states | 775 | ||||
Foreign | |||||
Netherlands | 1,541 | ||||
Other foreign | 141 | ||||
Total cash paid in income taxes, net of refunds received | $ | 5,056 | |||
Significant components of the Company’s net deferred income tax assets as of December 31, 2025 and 2024 are shown in the table below (in thousands). The Company assesses all available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative book loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this analysis, a valuation allowance of $270.3 million and $210.4 million as of December 31, 2025 and 2024, respectively, was recorded to offset the net deferred tax asset as realization of such asset is uncertain. However, the amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as the Company’s projections for future growth.
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss (NOL) carryforwards | $ | 62,970 | $ | 40,536 | |||||||
| Research and development tax credits carryforwards | 56,670 | 32,298 | |||||||||
| Capitalized research and development expenses | 57,122 | 74,974 | |||||||||
| Accrued compensation | 31,339 | 38,053 | |||||||||
| Lease liabilities | 31,996 | 29,165 | |||||||||
Warranty reserve | 13,096 | 12,222 | |||||||||
Intangible assets | 30,390 | — | |||||||||
| Other | 13,771 | 8,610 | |||||||||
| Total deferred tax assets | 297,354 | 235,858 | |||||||||
| Deferred tax liabilities: | |||||||||||
Fixed assets | (4,185) | (5,485) | |||||||||
| Operating lease right-of-use assets | (22,887) | (19,792) | |||||||||
| Other | — | (218) | |||||||||
| Total deferred tax liabilities | (27,072) | (25,495) | |||||||||
| Less valuation allowance | (270,282) | (210,363) | |||||||||
| Net deferred tax assets | $ | — | $ | — | |||||||
As of December 31, 2025, the Company had accumulated federal and state NOL carryforwards of approximately $379.0 million, and $349.3 million, respectively. Out of the total federal NOL carryforwards, approximately $295.3 million were generated after January 1, 2018, and therefore do not expire. NOLs generated after January 1, 2018, are subject to 80% limitation in accordance with the Tax Cuts and Jobs Act of 2017. The remaining federal NOL carryforwards of $83.7 million will begin to expire in 2034, and state NOL carryforwards continue to expire. The California NOL carryforwards of $200.5 million will begin expiring in 2029. The Company had approximately $34.3 million of international carryforwards as of December 31, 2025, which begin to expire in 2030.
The Company also has federal and California research and development credit carryforwards of approximately $41.0 million and $38.4 million, respectively, as of December 31, 2025. The federal research and development credit carryforwards will begin expiring in 2040, unless previously utilized. The California research and development credit will carry forward indefinitely.
Use of the Company's NOL and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations may result in the expiration of NOL carryforwards before utilization. The Company has completed an analysis through December 31, 2024 to determine whether its NOLs and credits are likely to be limited by Section 382. The Company is currently in a loss position for the year ended December 31, 2025 and will continue monitoring future ownership changes under Section 382. Additionally, ownership changes occurring after December 31, 2025 and future years may also limit the Company’s ability to fully utilize any remaining tax benefits.
The evaluation of uncertainty in a tax position is a two-step process. The first step involves recognition. The Company determines whether it is more likely than not that a tax position will be sustained upon tax examination, including resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position are derived from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution with a taxing authority.
The following table summarizes the activity related to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2025, 2024 and 2023 (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Gross unrecognized tax benefits at the beginning of the year | $ | 27,474 | $ | 21,527 | $ | 16,986 | |||||||||||
| Increases related to current year positions | 49,606 | 5,947 | 3,961 | ||||||||||||||
| Increases (decreases) related to prior year positions | (8,941) | — | 580 | ||||||||||||||
| Gross unrecognized tax benefits at the end of the year | $ | 68,139 | $ | 27,474 | $ | 21,527 | |||||||||||
As of December 31, 2025 and 2024, the Company had $39.8 million and $24.9 million of unrecognized tax benefits, respectively, that, if recognized and realized would impact the effective tax rate, subject to the valuation allowance.
The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company had no material accrual for interest and penalties on the Company’s consolidated balance sheets and the amount of interest and penalties recognized in the consolidated statements of operations were not material for the years ended December 31, 2025, 2024 and 2023.
The Company is subject to taxation in the United States and various foreign and state jurisdictions. Prior to 2018, the losses were all attributable to the United States. The Company’s tax years from 2006 (inception) are subject to examination by the United States and state authorities due to the carry forward of unutilized NOLs and research and development credits.
Undistributed earnings of the foreign subsidiaries are indefinitely reinvested. Thus, the Company has not recognized any deferred taxes on foreign unremitted earnings.
Free Sentinel
Track for freeWant the next TANDEM DIABETES CARE INC income taxes disclosure the moment it drops?
Set a Sentinel and we'll alert you the moment TANDEM DIABETES CARE INC's next filing hits EDGAR. No credit card, your email never gets sold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 8, 2017 | |
| 2015 | Feb 24, 2016 | |
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.