Income taxes |
6 Months Ended |
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Jun. 30, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income taxes | Income taxes The Company recorded income tax expense of $2.0 million and $3.5 million for the three months ended June 30, 2025 and 2024, respectively. The Company’s effective tax rate was 27.8% and 130.2% for the second quarter of 2025 and 2024, respectively. The Company recorded income tax expense of $1.6 million and $4.5 million for the six months ended June 30, 2025 and 2024, respectively. The Company’s effective tax rate for the six months ended June 30, 2025 was 16.2% and was not meaningful for the same period of 2024 due to an immaterial loss before tax compared to the income tax expense recorded during the period. The change in the effective tax rate for the three and six months ended June 30, 2025, as compared to the same periods in 2024, was attributable mainly to the income tax benefit related to equity compensation and the change in pre-tax loss to pre-tax income. For the three and six months ended June 30, 2024, the Company used a discrete effective tax rate method to calculate income taxes due to sensitivity of the forecast. Through June 30, 2024, the Company determined that small changes in the estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate causing material distortion in the year-to-date tax provision. As of June 30, 2025, the Company determined that it can reliably estimate full-year ordinary income and income tax expense. Therefore, for the six months ended June 30, 2025, the income tax expense was calculated by applying the estimated annual effective tax rate to the Company’s year-to-date pre-tax income taking into account discrete items. On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to the U.S. tax law that will be applicable to Grid Dynamics beginning in the third quarter of 2025. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. The Company is in the process of evaluating the impact of the Act on its financial statements but does not anticipate it to have a material effect.
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