Income Taxes and Tax Receivable Agreement

12 Months Ended

Dec. 31, 2025

Income Taxes and Tax Receivable Agreement

Overview of Income Taxes

Black Rock Coffee Bar, Inc. is a Subchapter C corporation and is subject to federal and state income taxes. Black Rock Coffee Bar, Inc.'s sole material asset is its ownership interest in Black Rock OpCo, which is a limited liability company that is treated as a partnership for U.S. federal and certain state and local income tax purposes. Black Rock OpCo's net taxable income and related tax credits, if any, are passed through to its members and included in the members' tax returns. The income tax burden on the earnings taxed to the noncontrolling interest holders is not reported by the Company in its consolidated financial statements under U.S. GAAP.

Provision for Income Taxes

Components of income tax expense are as follows:


	Year Ended December 31,
(in thousands)	2025		2024		2023
Current tax provision
Federal	$	(12)	$	—	$	—
State	293		270		357
Total current tax provision	281		270		357

Deferred tax expense (benefit)
Federal	$	(77)	$	—	$	—
State	271		—		—
Total deferred tax provision	194		—		—

Income tax expense	$	475	$	270	$	357

Our effective income tax rate differs from the U.S. federal statutory income tax rate as itemized below:


	Year Ended December 31,
	2025		2024		2023
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Effect of flow-through entity	(20.3)		(21.0)		(21.0)
Income allocable to noncontrolling interests not subject to tax	(0.8)		—		—
State and local income taxes, net of federal benefit	(2.3)		—		—
Tax credits	0.7		—		—
TRA Adjustments	0.4		—		—
Other	(1.7)		(3.9)		(4.3)
Effective income tax rate	(3.0)	%	(3.9)	%	(4.3)	%

Our effective tax rate for the years ended December 31, 2025, 2024, and 2023, differs from the U.S. federal statutory rate of 21% due primarily to the effect of the flow-through entity which the taxable income or loss is allocated to the members.

The components of our deferred tax assets are as follows:


(in thousands)	December 31, 2025		December 31, 2024
Deferred tax assets
Investment in Black Rock OpCo	$	51,204	$	—
Net operating loss carryforwards	1,455		—
Credit carryforwards	103		—
Charitable contribution carryforward	2		—
Total deferred tax assets	52,764		—
Less: valuation allowance	—		—
Net deferred tax assets	$	52,764	$	—

The deferred tax assets are due to the tax effects of temporary differences in the book basis as compared to the tax basis of Black Rock Coffee Bar, Inc.'s investment in Black Rock OpCo as a result of Black Rock Coffee Bar, Inc.'s investment in Black Rock OpCo. The Company recognizes deferred tax assets to the extent it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. As of December 31, 2025, the Company concluded, based on the evaluation of all available positive and negative evidence, that all of its deferred tax assets are more likely than not to be realized.

As each of the Continuing Equity Owners elects to convert their LLC Units into Class A common stock, Black Rock Coffee Bar, Inc. will assume their aggregate historical tax basis, which will create a net tax benefit for the Company. The Company will only recognize a deferred tax asset for financial reporting purposes when it is more-likely-than-not that the tax benefit will be realized.

As of December 31, 2025, we had U.S. federal net operating losses of approximately $6.4 million which do not expire.

We file returns with the Internal Revenue Service and multiple state jurisdictions, which are subject to examination by the taxing authorities for years 2022 and later.

On July 4, 2025, the legislation commonly referred to as the One Big Beautiful Bill Act (OBBBA) was enacted in the United States. The OBBBA includes several significant changes in the U.S. tax law, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and the restoration of favorable tax treatment for specific business provisions. Other than the permanent extension of bonus depreciation provisions in the OBBBA, which will lower near term taxable income and cash distributions to the members of Black Rock OpCo (including Black Rock Coffee Bar Inc.), we do not expect the effects of this legislation to have a material impact on the Company’s financial results.

Tax Receivable Agreement

In connection with Transactions, the Company entered into a TRA with Black Rock OpCo and Continuing Equity Owners that provides for the payment by Black Rock Coffee Bar, Inc. to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that Black Rock Coffee Bar, Inc. realizes (or in some circumstances is deemed to realize) related to the tax basis adjustments.

As of December 31, 2025, the Company had a liability of approximately $38.9 million related to its projected obligations under the TRA and is classified as non-current on the consolidated balance sheets based on the expected date of payment.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

Black Rock Coffee Bar, Inc. 10-K