Trevi Therapeutics, Inc. Income Taxes Disclosure

The Company recorded an income tax benefit related to state research and development tax credits. The components of the income tax benefit for the periods shown are as follows:

For the years ended December 31, 2024 and 2023, the Company generated federal and state net operating losses (“NOLs”) of approximately $13.1 million and $8.1 million, respectively. At December 31, 2024 and 2023, the federal and state net operating loss balances were approximately $199.8 million and $186.9 million, respectively. The federal operating losses generated prior to 2018 will expire in years 2031 through 2037, unless previously utilized. The federal operating losses generated in 2018 or later can be carried forward indefinitely, however will only offset 80% of taxable income in a carryforward year. The state operating losses generated will expire in years 2031 through 2044, unless previously utilized. The Company also generated federal R&D tax credits for the years ended December 31, 2024 and 2023 of approximately $1.1 million and $848, respectively. At December 31, 2024 and 2023, the federal R&D tax credit carryforwards were approximately $7.3 million and $6.2 million, respectively. These credits will expire in years 2032 through 2044, unless previously utilized. The Company completed a detailed Section 382 analysis, and due to multiple historical ownership changes, the Company’s NOLs as of December 31, 2022, in the amount of $178.4 million and R&D tax credits in the amount of $5.4 million are subject to limitation. If a further ownership change occurs, the Company’s ability to use its tax attributes might be further limited.

The Company also generated state research tax credits for the years ended December 31, 2024 and 2023 of approximately $296 and $265, respectively. At December 31, 2024 and 2023, the state R&D tax credit carryforwards were approximately $244 and $275, respectively. The Company applied to exchange a portion of these credits for cash under a state-run program. These amounts, $30 and $32 for the years ended December 31, 2024 and 2023, respectively, were recognized as current income tax benefits in the Company’s Consolidated Statements of Comprehensive Loss. At each of December 31, 2024 and 2023, the Company’s Consolidated Balance Sheets reflect income tax receivables of $130 and $32 respectively, related to these credits. Because of the net operating loss and research credit carryforwards, tax years 2011 through 2023 remain open to U.S. federal and state tax examinations.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to amortize U.S. expenses over five years and non-U.S. expenses over fifteen years pursuant to Internal Revenue Code Section 174. In the future, Congress may consider legislation that would defer the amortization requirement to later years, possibly with retroactive effect. In the meantime, we expect to continue to capitalize research and development expenses under the current tax law. The impact of Section 174 on the Company's deferred tax assets depends on the amount of research and development expenditures incurred by the Company and whether the IRS issues guidance on the provision, which differs from the Company's current interpretation, among other things. For the for the years ended December 31, 2024 and 2023, this provision resulted in additional deferred tax assets of $7.6 million and $4.8 million, respectively.

Income taxes are provided using the asset/liability method, in which deferred taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and tax bases of existing assets and liabilities. The Company reviews deferred tax assets for recoverability on a regular basis. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. Accounting guidance states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against deferred tax assets. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

The Company determined that operating losses it incurred since its inception on March 17, 2011, represented negative evidence sufficient to conclude a valuation allowance was necessary. As such, the Company has recorded a valuation allowance of $82.4 million and $69.5 million at December 31, 2024 and 2023, respectively, as a reserve against its net deferred tax assets. These balances reflect increases in the valuation allowance of $12.9 million and $8.4 million in 2024 and 2023, respectively, both representing an increase in net deferred tax assets.

The Company applies the provisions of ASC 740, which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The financial statements reflect expected future tax consequences of such positions presuming the taxing authorities possess full knowledge of the position and all relevant facts. As a result of the implementation of ASC 740, the Company recognized no adjustment for unrecognized income tax benefits. The Company has not, as of yet, conducted a study of R&D tax credit carryforwards. Such a study could result in an adjustment to the Company’s R&D tax credit carryforwards; however, until a study is completed and any potential adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s R&D tax credits and, if an adjustment is required in the future, this adjustment would be offset by a corresponding adjustment to the valuation allowance. For the years ended December 31, 2024 and 2023, the Company had

no unrecognized tax benefits or related interest and penalties accrued. In the event the Company determines that accrual of interest or penalties are necessary in the future, the amount will be presented as a component of interest expense.