10x Genomics, Inc.TXG
10x Genomics, Inc. Income Taxes Disclosure
Income Tax
Income (loss) before provision for income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (44,598) | $ | (187,720) | $ | (263,292) | |||||||||||
| International | 4,691 | 10,020 | 14,529 | ||||||||||||||
| Total | $ | (39,907) | $ | (177,700) | $ | (248,763) | |||||||||||
The provision for income taxes consisted of the following (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current provision: | |||||||||||||||||
| Federal | $ | (7) | $ | 396 | $ | 351 | |||||||||||
| State | 397 | 314 | 180 | ||||||||||||||
| Foreign | 3,557 | 3,508 | 6,252 | ||||||||||||||
| Total current provision for income taxes | 3,947 | 4,218 | 6,783 | ||||||||||||||
| Deferred provision: | |||||||||||||||||
| Federal | — | — | — | ||||||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | (310) | 709 | (447) | ||||||||||||||
| Total deferred provision for income taxes | (310) | 709 | (447) | ||||||||||||||
| Provision for income taxes | $ | 3,637 | $ | 4,927 | $ | 6,336 | |||||||||||
A reconciliation of the federal statutory income tax provision to the effective income tax provision is as follows (in thousands):
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
| U.S. federal statutory tax rate | $ | (8,380) | 21 | % | |||||||
State and local income taxes, net of federal income tax effect (a) | (2,363) | 6 | % | ||||||||
| Foreign tax effects | |||||||||||
| Singapore | |||||||||||
| Nondeductible compensation | 1,179 | (3) | % | ||||||||
| Other | (248) | 1 | % | ||||||||
| Other foreign jurisdictions | 274 | (1) | % | ||||||||
| Effect of cross-border tax laws | 336 | (1) | % | ||||||||
| Tax credits | |||||||||||
| Research and development tax credits | (4,250) | 11 | % | ||||||||
| Changes in valuation allowance | (5,038) | 13 | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Stock-based compensation | 14,551 | (37) | % | ||||||||
| Executive compensation (162(m)) | 1,208 | (3) | % | ||||||||
| Other items | 503 | (1) | % | ||||||||
| Changes in unrecognized tax benefits | 5,865 | (15) | % | ||||||||
| Effective tax rate | $ | 3,637 | (9) | % | |||||||
___________________
(a) State taxes in California, Pennsylvania and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Income tax provision at federal statutory rate | $ | (37,317) | $ | (52,240) | |||||||
| State taxes, net of federal benefit | (11,938) | (14,831) | |||||||||
| Tax credits | (8,895) | (14,551) | |||||||||
| Foreign taxes | 2,148 | 3,888 | |||||||||
| Stock-based compensation | 15,978 | 2,422 | |||||||||
| Change in valuation allowance | 36,378 | 79,551 | |||||||||
| Acquisition related expenses | — | 2,296 | |||||||||
| Waived deductions under Section 59A | 8,190 | — | |||||||||
| Other | 383 | (199) | |||||||||
| Total provision for income taxes | $ | 4,927 | $ | 6,336 | |||||||
Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes. The major components of deferred tax assets and liabilities are as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Net operating loss carryforwards | $ | 202,704 | $ | 161,681 | |||||||
| Research and development tax credits | 111,143 | 103,555 | |||||||||
| Accruals and reserves | 17,323 | 12,302 | |||||||||
| Operating lease liability | 19,441 | 19,628 | |||||||||
| Intangibles | 27,845 | 35,966 | |||||||||
| Stock-based compensation | 24,383 | 26,772 | |||||||||
Capitalized research and development | 103,001 | 136,267 | |||||||||
| Total deferred tax assets | 505,840 | 496,171 | |||||||||
| Valuation allowance | (490,154) | (479,452) | |||||||||
| Net deferred tax assets | 15,686 | 16,719 | |||||||||
| Deferred tax liabilities | |||||||||||
| Property and equipment | (2,855) | (4,124) | |||||||||
| Operating right-of-use assets | (13,436) | (13,510) | |||||||||
| Total deferred tax liabilities | (16,291) | (17,634) | |||||||||
| Net deferred tax liabilities | $ | (605) | $ | (915) | |||||||
As of December 31, 2025 and 2024, the Company maintained a full valuation allowance on its U.S. net deferred tax assets. The U.S. deferred tax assets predominantly relate to operating losses, tax credits and capitalized research and development intangibles. The U.S. valuation allowance was estimated based on an assessment of both positive and negative evidence to determine whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. The Company’s history of cumulative losses, along with expected future U.S. losses, required that a full valuation allowance be recorded against all U.S. net deferred tax assets. The Company intends to maintain a full valuation allowance on U.S. net deferred tax assets until sufficient positive evidence exists to support a reversal of the valuation allowance. The valuation allowance increased by $10.7 million and by $36.4 million for the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2025, the Company had federal net operating loss (“NOL”) carryforwards of $808.1 million and federal tax credit carryforwards of $93.8 million. The federal NOL carryforwards generated after December 31, 2017 totaling $802.3 million are carried forward indefinitely, while all other federal NOL and tax credit carryforwards expire beginning in 2033 and 2036, respectively. As of December 31, 2025, the Company had state NOL carryforwards of $506.5 million, which begin to expire primarily in 2033. In addition, the Company had state tax credit carryforwards of $77.4 million, which do not expire.
Utilization of the net operating loss and tax credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Any annual limitation may result in the expiration of net operating losses and credits before utilization. If an ownership change occurred, utilization of the net operating loss and tax credit carryforwards could be significantly reduced.
Income taxes paid, net of refunds received, consisted of the following (in thousands):
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
| State | $ | 195 | 8 | % | |||||||
| Foreign | |||||||||||
| Singapore | 947 | 40 | % | ||||||||
| Other foreign jurisdictions | 1,249 | 52 | % | ||||||||
| Total income taxes paid, net of refunds received | $ | 2,391 | 100 | % | |||||||
The total balance of unrecognized gross tax benefits, resulting primarily from research and development tax credits claimed on the Company’s annual tax returns, were as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Unrecognized tax benefits at beginning of year | $ | 50,022 | $ | 45,713 | |||||||
| Reductions related to settlements with tax authorities | — | (285) | |||||||||
| Reductions based on prior year tax provisions | (739) | (1,617) | |||||||||
| Additions related to acquisitions | 2,287 | — | |||||||||
| Additions based on prior year tax provisions | 436 | 467 | |||||||||
| Additions based on current year tax provisions | 3,484 | 5,744 | |||||||||
| Unrecognized tax benefits at end of year | $ | 55,490 | $ | 50,022 | |||||||
The total amount of unrecognized gross tax benefits was $55.5 million and $50.0 million as of December 31, 2025 and 2024, respectively, of which $3.3 million and $2.9 million, if recognized, would affect our effective tax rate, respectively.
The Company is subject to the examination of its income tax returns by the U.S. Internal Revenue Service and other domestic and foreign tax authorities. The United States, California, Singapore, and Sweden are considered as major jurisdictions. The Company has not been audited in such jurisdictions. Tax examinations are expected to focus primarily on research and development tax credits and intercompany transfer pricing practices. Due to NOLs and tax credit carryforwards, as of December 31, 2025, federal and California income tax returns for the years ended 2012 through the current period are open to examination. Significant foreign income tax returns for the years 2019 through the current period are open to examination. Due to the number of years remaining that are subject to examination, the Company is unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.
The Company includes interest and penalties related to income tax matters within the provision for income taxes. The total amount of gross interest and penalties accrued was $2.1 million and $1.6 million for the years ended December 31, 2025 and 2024, respectively. The Company recognized interest and penalty expenses of $0.6 million, $0.7 million and $0.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company maintained undistributed earnings overseas as of December 31, 2025, and the Company believed the funds held by all non-U.S. subsidiaries will be permanently reinvested outside of the U.S. However, if these funds were repatriated to the U.S. or used for U.S. operations, the Company may be subject to withholding taxes in the foreign countries. As a result of tax reform, the Company’s unrepatriated earnings are no longer subject to federal income tax in the U.S. when distributed.
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.