v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
On July 4, 2025, the One Big Beautiful Bill Act (the “Bill”) was enacted into law. The Bill provides for significant U.S. tax law changes and modifications and makes permanent certain key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, the expensing of domestic research costs, and the business interest expense limitation. The provisions of the Bill did not have a material impact on our consolidated financial statements for the year ended December 31, 2025.
We are subject to income taxes in the United States (federal and state) and certain foreign jurisdictions. We recorded income tax expense of $2 million, $5 million, and $4 million for the years ended December 31, 2025, 2024, and 2023 respectively, primarily due to state taxes.
The following table presents the components of our income tax expense for the periods presented (in millions):
 Year Ended December 31,
 202520242023
Current income tax expense (benefit):
State$(1)$3 $4 
Foreign1 1 — 
Total current income tax expense (benefit)— 4 4 
Deferred income tax expense:
Federal1 1 — 
State1 — — 
Total deferred income tax expense
2 1 — 
Total income tax expense
$2 $5 $4 
The following table presents the difference between income tax expense at the U.S. federal statutory income tax rate and the reported income tax expense for the year ended December 31, 2025:
AmountPercentage
Federal statutory income tax$5 (21.0)%
Domestic - federal:
Research and development credits(54)213.2 %
Non-taxable or non-deductible items:
Non-deductible executive compensation10 (41.0)%
Excess tax benefits on share-based compensation (36)141.6 %
Meals and entertainment2 (6.7)%
Other, net— (0.6)%
Changes in valuation allowances - federal55 (216.3)%
U.S. state and local income taxes(5)21.4 %
Foreign tax effects1 (5.0)%
Worldwide changes in unrecognized tax benefits24 (95.5)%
Effective taxes$2 (9.9)%
The following table presents a reconciliation of the federal statutory rate and our effective tax rate for the periods presented:
 
Year Ended December 31,
 20242023
Tax expense at federal statutory rate(21.0)%(21.0)%
State income taxes, net of federal tax benefit(11.1)2.6 
Meals and entertainment
1.6 0.1 
Share-based compensation5.3 10.4 
Non-deductible executive compensation16.9 10.8 
Research and development credits(36.3)(6.8)
Other, net
1.9 (8.3)
Valuation allowance46.7 15.0 
Effective tax rate4.0 %2.8 %
Deferred federal, state and foreign income taxes reflect the net tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and such amounts for tax purposes. The following table presents the significant components of our deferred tax assets and liabilities as of the dates presented (in millions):
 December 31,
 20252024
Deferred tax assets:
Federal and state net operating loss carryforwards$438 $345 
Research and development credits250 206 
Capitalized research and development156 247 
Share-based compensation111 110 
Lease liabilities
23 24 
Accruals and reserves9 8 
Intangible assets5 — 
Other deferred tax assets
— 3 
Total deferred tax assets992 943 
Deferred tax liabilities:
Right of use assets(14)(14)
Intangible assets— (5)
Goodwill(18)(13)
Other deferred tax liabilities
(1)(1)
Total deferred tax liabilities(33)(33)
Net deferred tax assets before valuation allowance959 910 
Less: valuation allowance(965)(914)
Net deferred tax liabilities $(6)$(4)
Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. We have provided a full valuation allowance against the net deferred tax assets as of December 31, 2025 and 2024 because, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets will not be realized. The valuation allowance increased by $51 million and $49 million during the years ended December 31, 2025 and 2024, respectively.
We have accumulated federal net operating losses of approximately $1.8 billion and $1.3 billion, as of December 31, 2025 and 2024, respectively, which are available to reduce future taxable income. We have accumulated tax effected state net operating losses of approximately $70 million and $66 million as of December 31, 2025 and 2024, respectively. Federal net operating losses generated in taxable periods on or before December 31, 2017 have a twenty-year carryforward period and begin to expire in 2036. Federal net operating loss carryforwards generated in taxable years beginning after December 31, 2017
may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards in taxable years beginning after December 31, 2020 is limited to 80% of taxable income. State net operating loss carryforward periods for the various jurisdictions generally range from three years to indefinite-lived and began to expire in 2024. Additionally, we have net research and development credit carryforwards of $250 million and $205 million as of December 31, 2025 and 2024, respectively, which are available to reduce future tax liabilities. The research and development credit carryforwards began to expire in 2025. Under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research and development credits, to offset its post-change taxable income or income tax liability may be limited. We have completed a detailed study and concluded there were multiple ownership changes, triggering the application of Section 382 of the Internal Revenue Code. Based on our most recent analysis, we do not currently anticipate any material reduction in our ability to utilize our net operating loss and tax credit carryforwards under these rules.
Our primary income tax jurisdiction is the United States (federal). With limited exceptions for state taxing authorities which are not material to the financial statements, all tax years for which we have filed a tax return remain subject to examination due to the existence of net operating loss carryforwards.
Changes for unrecognized tax benefits for the periods presented are as follows (in millions):
Balance at January 1, 2023
$90 
Gross increases—current period tax positions9 
Gross increases—prior period tax positions
3 
Gross decreases—prior period tax positions(7)
Balance at December 31, 2023
$95 
Gross increases—current period tax positions16 
Gross increases—prior period tax positions6 
Gross decreases—prior period tax positions
(1)
Gross decreases—statute of limitations lapse
(1)
Balance at December 31, 2024
$115 
Gross increases—current period tax positions20 
Gross increases—prior period tax positions4 
Balance at December 31, 2025
$139 
At December 31, 2025, the total amount of unrecognized tax benefits of $139 million is recorded as a reduction to our deferred tax asset when available. Accrued interest and penalties related to unrecognized tax benefits are recorded as income tax expense and are not material.