VERRA MOBILITY Corp Income Taxes Disclosure

The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, in fiscal year 2025, and as a result, updated the presentation of income tax financial information on a prospective basis.

As of December 31, 2025 and 2024, the Company presented $8.0 million and $34.7 million, respectively, of deferred tax assets, net, to reflect U.S. entity deferred taxes within other non-current assets in the Company’s consolidated balance sheets.

As of December 31, 2025, the Company has provided income taxes on the earnings of foreign subsidiaries, except to the extent such earnings are considered indefinitely reinvested. The amount of the unrecognized deferred tax liability related to these temporary differences is approximately $0.8 million.

In accordance with ASC 740, Income Taxes, deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets can be affected by, among other things, the nature, frequency, and severity of current and cumulative losses, forecasts of future profitability, limitations on the use of acquired tax attributes due to an ownership change under the Internal Revenue Code of 1986, as amended (“IRC”) section 382, the length of statutory carryforward periods, the Company’s experience with utilizing operating losses and tax credit carryforwards by jurisdiction, and tax planning alternatives and strategies that may be available.

The Company performed an analysis of the reversal of the deferred tax assets and considered the overall business environment, historical earnings, the outlook for future years and the impact of limitations on the use of acquired tax attributes due to an ownership change under IRC section 382. The Company determined that it is more likely than not that the benefit from certain foreign net operating loss carryforwards will not be realized as of the years ended December 31, 2025 and 2024, and as such provided a valuation allowance of $9.0 million and $5.5 million, respectively. The valuation allowance could be adjusted in future periods 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.

The net operating loss carryforwards represent $115.2 million and $103.0 million of federal, state, and foreign net operating losses at December 31, 2025 and 2024, respectively. The federal net operating loss carryforward at December 31, 2025 consists of $8.4 million of losses that were generated after 2017 with no expiration date. The Company also has certain tax credits of $1.0 million and $3.8 million at December 31, 2025 and 2024, respectively, which if unused will begin to expire in 2026.

Included in the balance of unrecognized tax benefits as of December 31, 2025 were $10.2 million of tax benefits that, if recognized, would impact the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. The Company recognized $(0.6) million for fiscal year 2025 and $1.0 million for fiscal year 2024 in interest and penalties. The Company had accrued interest and penalties of $1.6 million and $2.2 million at December 31, 2025 and 2024, respectively. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based on technical merits, it is more likely than not that the tax position will be sustained under examination.

The Company is subject to examination by the Internal Revenue Service and taxing authorities in various jurisdictions. The Company files U.S. federal and various foreign income tax returns which are subject to examination by the taxing authorities in the respective jurisdictions, generally for three or four years after they are filed. The Company’s state income tax returns are generally no longer subject to income tax examination by tax authorities prior to 2021; however, the Company’s net operating loss carryforwards and research credit carryforwards arising prior to that year are subject to adjustment. The Company is currently under audit by various state tax jurisdictions for the years 2018 through 2022; however, no material adjustments are anticipated. The Company regularly assesses the likelihood of tax deficiencies in each of the tax jurisdictions and, accordingly, makes appropriate adjustments to the tax provision as deemed necessary.

New Legislation

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The Company’s U.S. income tax liability and net deferred tax assets have been updated to reflect the impact of the legislation.