Income Taxes

12 Months Ended

Dec. 31, 2025

The components of (loss) income before provision for income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands):


	2025		2024		2023
Domestic loss before provision for income taxes	$	(103,891)	$	(101,108)	$	(95,977)
Foreign income before provision for income taxes	2,610		157		17
Loss before provision for income taxes	$	(101,281)	$	(100,951)	$	(95,960)

The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 consists of the following (in thousands):


	2025		2024		2023
Current:


Foreign	$	58	$	56	$	—
Total current	58		56		—





Income tax provision	$	58	$	56	$	—

The table below provides the updated requirements of ASU 2023-09 for the year ended December 31, 2025. For further discussion related to ASU 2023-09, please refer to Note 2 . Summary of S ignificant A ccounting P olicies. For purposes of reconciling the Company’s provision for income taxes at the statutory rate and the Company’s provision for income taxes at the effective rate, a notional 21% tax rate was applied as follows:


	2025
	$		%
U.S. federal income tax at statutory rate	$	(21,269)	21.00%
State and local income taxes, net of federal income tax effect(1)	(277)		0.27
Foreign tax effect
Other foreign	(305)		0.30
Effect of cross-border tax laws
Other	548		(0.54)
Tax credits

Changes in valuation allowance	19,218		(18.97)
Nontaxable or nondeductible items

Officer compensation	1,386		(1.37)
Other	(420)		0.41
Changes in unrecognized tax benefits	1,177		(1.16)

Income tax expense and effective income tax rate	$	58	(0.06%)

(1) For the year ended December 31, 2025, the states and district that contributed to the majority (greater than 50%) of the tax effect in this category include California, Connecticut, District of Columbia, Massachusetts and New York.

As previously disclosed, for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:


	2024		2023
	%		%
Federal income tax at statutory rate	21.00	%	21.00%
State income tax, net of federal benefit	3.21		7.81
Uncertain tax positions	(0.15)		(1.45)
Tax credits generated in current year	(3.41)		0.68
Return to provision adjustments	—		(3.25)
Stock-based compensation	(1.01)		(3.17)
Other	0.51		(0.10)
Tax rate change	(3.41)		—
Valuation allowance change	(16.79)		(21.52)
Effective tax rate	(0.05)	%	—%

The difference between the statutory federal income tax rate and the Company’s effective tax rate in 2024 and 2023 is primarily attributable to the effect of losses sustained which required a valuation allowance.

The amounts of cash income taxes paid by the Company are as follows (in thousands):


	2025


Foreign
France	24
Total	$	24

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 related to the following (in thousands):


	2025		2024
Deferred income tax assets:
Net operating loss carryforwards	$	128,955	$	101,115
Tax credit carryforwards	11,306		10,576
Stock-based compensation	2,866		2,997
Operating lease liabilities	1,036		3,258
Loss on marketable securities	4,994		3,963
Capitalized research and development	22,342		32,220
Property and equipment	2,927		—
Other	4,515		5,687
Total deferred income tax assets	$	178,941	$	159,816

Deferred income tax liabilities:
Operating lease right-of-use assets	$	(861)	$	(3,287)
Property and equipment	—		(36)
Total deferred income tax liabilities	(861)		(3,323)
Valuation allowance	(178,080)		(156,493)
Net deferred tax assets	$	—	$	—

A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence such as its projections for future growth. On the basis of this evaluation, as of December 31, 2025 and 2024, the Company recorded a valuation allowance of $178.1 million and $156.5 million, respectively. The valuation allowance increased by $21.6 million and $17.0 million, for the years ended December 31, 2025 and 2024, respectively, due to losses incurred that cannot be realized.

As of December 31, 2025, the Company has accumulated federal and state net operating loss (“NOL”) carryforwards of $513.1 million and $355.8 million, respectively. Of the $513.1 million of federal NOL carryforwards, $65.5 million was generated before January 1, 2018 and is subject to the 20-year carryover period (“pre-Tax Act losses”) and begin to expire in 2033. The remaining $447.6 million can be carried forward indefinitely but is subject to the 80% taxable income limitation. Of the $355.8 million of state NOL carryforwards, $24.5 million can be carried forward indefinitely with the remaining beginning to expire in 2031.

In addition, the Company has federal and Connecticut research and development credit carryforwards totaling $8.1 million and $5.3 million, respectively. The federal research and development credits begin to expire in 2033 unless previously utilized. The Connecticut research and development credits do not expire.

The Company also has federal and state capital loss carryforwards totaling $20.1 million and $14.6 million, respectively. The capital losses start expiring in 2027 unless previously utilized.

Pursuant to Sections 382 and 383 of the Internal Revenue Code (“IRC”), annual use of the Company’s NOL and credit carryforwards may be limited in the event a cumulative change of ownership of more than 50% occurs within a three-year period. Since the Company’s formation, the Company has raised capital through the issuance of capital stock, which on its own or combined with the purchasing stockholders’ subsequent disposition of those shares, may have resulted in such an ownership change, or could result in an ownership change.

Upon the occurrence of an ownership change under Section 382 as outlined above, utilization of the Company’s NOL and research and development credit carryforwards are subject to an annual limitation, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, which could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL or research and development credit carryforwards before utilization. The Company has completed an analysis through December 31, 2025 and no such ownership change has occurred, however, an ownership change may occur in the future.

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of related appeals or litigation processes if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcome of examinations by tax authorities in determining the adequacy of its provision for income taxes.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits as of December 31, 2025, 2024 and 2023 (in thousands):


	2025		2024		2023
Beginning balance	$	1,685	$	1,379	$	—
(Decreases) increases related to prior year tax positions	(153)		136		1,310
Increases related to current year tax positions	1,404		170		69
Ending balance	$	2,936	$	1,685	$	1,379

As of December 31, 2025, the Company had gross unrecognized tax benefits of $2.9 million which would affect the effective tax rate if recognized subject to valuation allowance. The Company’s policy is to recognize the interest expense and/or penalties related to income tax matters as a component of income tax expense. As of both December 31, 2025, the Company had no accrued interest and penalties recorded on its Consolidated Balance Sheets.

The Company is subject to taxation in the United States, various states within the United States, and France. The Company was notified in November 2024 that the Internal Revenue Service (“IRS”) will be examining their December 31, 2022 Federal income tax return. The audit commenced during 2025 and remains open as of December 31, 2025. As a result of the audit, the IRS proposed certain adjustments with respect to the tax reporting of our former executives’ 2022 compensation amounts, and the reclassification of an amount originally reported a net operating loss to a capital loss. Due to our current and historical loss position, the proposed adjustments would have no material impact on our Federal income tax; therefore, the Company has agreed to make the adjustments as proposed by the IRS. The net operating loss has been reduced by $7.4 million of which $4.4 million has been reclassified from net operating loss to capital loss. The Company has not been notified that it is under audit by any state or foreign taxing authorities, however, due to the presence of NOL carryforwards, all of the income tax years remain open for examination in each of these jurisdictions.

Additionally, as a result of legislation in the state of Connecticut and the country of France, companies have the opportunity to exchange certain research and development tax credit carryforwards for a cash refund. The research and development expenses that qualify for this benefit are limited to those costs incurred within each jurisdiction. The Company has elected to participate in these exchange programs and, as a result, has recognized net benefits of $2.6 million for the year ended December 31, 2025, and $0.2 million for each of the years ended December 31, 2024 and 2023, which are included in Research and development in the Consolidated Statements of Operations and Comprehensive Loss. As of December 31, 2025 and 2024, the Company recorded $0.7 million of the research and development tax credit receivables in Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets. As of December 31, 2025, all refunds for years prior to 2024 have been received by the Company.

The Company analyzes undistributed earnings of its foreign disregarded entity and has accrued withholding taxes of $0.1 million for earnings that are not permanently reinvested. No additional deferred tax liability has been established, as the parent entity would not be required to include the distribution into income as the amount would be tax free under current law.

On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act, was enacted in the U.S., which includes a broad range of tax reform provisions, including extending and modifying certain key Tax Cuts and Jobs Act provisions (both domestic and international), and provisions allowing accelerated tax deductions for qualified property and research expenditures. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. The legislation’s enactment did not materially impact our effective income tax rate or cash tax position for the year ended December 31, 2025.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

Quantum-Si Inc 10-K