v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
As a result of the Business Combination, WM Technology, Inc. became the sole managing member of WMH LLC, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, WMH LLC is not subject to U.S. federal and certain state and local income taxes. Accordingly, no provision for U.S. federal and state income taxes has been recorded in the financial statements for the period prior to June 16, 2021, as this period was prior to the Business Combination.
Following the Business Combination, any taxable income or loss generated by WMH LLC is passed through to and included in the taxable income or loss of its members, including WM Technology, Inc., on a pro rata basis, with the remainder reflected in the line item Income Taxed to Owners of Non-controlling Interests. WM Technology, Inc. is subject to U.S. federal income taxes, state and local income taxes with respect to its allocable share of any taxable income of WMH following the Business Combination. The owners of the non-controlling interests are taxed as a partnership, and therefore, no tax provision is allocated to non-controlling interests on the consolidated statements of operations. The Company is also subject to taxes in foreign jurisdictions.
Income Before Income Tax Provision
The components of income before taxes are as follows (in thousands):
Years Ended December 31,
20252024
Domestic$3,338 $12,279 
Foreign18 (46)
Income before income taxes3,356 12,233 
Income Tax Provision
The components of the provision for income taxes are as follows (in thousands):
Years Ended December 31,
20252024
Current
Federal$— $6 
State88 40 
Foreign5 — 
93 46 
Deferred
Federal— — 
State— — 
Foreign— — 
— — 
Provision for income taxes$93 $46 
The change in the Company’s income tax provision during the years ended December 31, 2025 and 2024 were due to the continuation of recording a full valuation allowance on our deferred tax assets and continued remeasurement of the related TRA liability.
The following reconciles the differences between income taxes computed at the federal statutory rate and the provision for income taxes, under newly adopted ASU 2023-09 "Improvements to Income Tax Disclosures," which we adopted for the year ended 2025 on a retrospective basis (in thousands):
Years Ended December 31,
20252024
Federal statutory rate $705 21.0 %$2,607 21.0 %
State blended statutory rate(1)
962 28.7 %157 1.3 %
Income taxed to owners of non-controlling interests(297)(9)%(1,219)(9.8)%
Foreign tax impact1 — %— — %
Stock based compensation— — %1,446 11.7 %
Other permanent items 35 1.0 %65 0.5 %
Research and development credits(1,287)(38.4)%(1,298)(10.5)%
Meals and entertainment— — %286 2.3 %
Executive compensation401 12.0 %282 2.3 %
Change in valuation allowance (627)(18.7)%(3,045)(24.5)%
Tax receivable agreement revaluation200 6.0 %455 3.7 %
Fines and penalties— — %310 2.5 %
Provision for income taxes$93 2.8 %$46 0.4 %
(1) State taxes in California comprise the majority of the state and local taxes for each of the years presented.
Deferred Income Taxes
Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting and the amounts used for tax purposes.
The significant components of the net deferred tax assets were as follows (in thousands):
December 31, 2025December 31, 2024
Deferred tax assets
Investment in partnership$109,435 $120,258 
Tax receivable agreement36,631 36,908 
Net operating loss carryovers32,373 20,973 
Tax credit carryovers7,001 5,303 
Other463 534 
 Total deferred tax asset185,903 183,976 
Less: valuation allowance(185,903)(183,976)
Net deferred tax asset$— $— 
The Company’s deferred tax asset is primarily attributable to future tax amortization deductions of tax basis created from the Business Combination, subsequent redemptions and exchanges of WMH Units, and future TRA payments. These deferred tax assets generally amortize over 15 years beginning on the date the WMH Units are deemed to have been exchanged or redeemed, or TRA payments are made, as applicable. Tax amortization deductions in excess of taxable income from operations result in a net operating loss, which can be carried forward indefinitely for federal tax purposes
The valuation allowance increased $1.9 million and decreased $2.7 million for the years ended December 31, 2025 and 2024, respectively. Realization of deferred tax assets is dependent on future earning, if any, the timing of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance
The Company assesses whether it is “more-likely-than-not” that it will realize its deferred tax assets. The Company establishes a valuation allowance when available evidence indicates that it is more-likely-than-not that the deferred tax asset will not be realized. In assessing the need for a valuation allowance, the Company considers the amounts and timing of expected future deductions or carryforwards and sources of taxable income that may enable utilization. This includes an analysis of the Company’s current financial position, results of operations for the current and prior years and all currently available information about future years. This assessment and estimates require significant management judgment. The Company maintains an existing valuation allowance until enough positive evidence exists to support its reversal. Change in the amount or timing of expected future deductions or taxable income may have a material impact on the level of income tax valuation allowances
Based on the weight of all available evidence, both positive and negative, the Company determined during the fourth quarter of 2022 that a full valuation allowance was required against its net deferred tax assets. Management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Significant pieces of negative evidence evaluated were the book operating loss incurred during the year ended December 31, 2023 and fluctuation in both historical book operating results and future expectations. For the years ended December 31, 2025 and 2024, management conducted a similar analysis, and determined that a full valuation allowance was still required based on a more likely than not standard. Payment with respect to the TRA liability was not probable, resulting from the full valuation allowance. As of December 31, 2025 and 2024, the TRA liability was $2.7 million and $4.4 million, respectively.
The Company will continue to evaluate the realization of the TRA tax attributes, and in the future, management may conclude that it is more likely than not that the Company will be able to utilize the deferred tax assets that are subject to the TRA, and therefore that the TRA liability is probable of payment. If the TRA liability is reinstated, the payments would be substantial. Assuming a reinstatement of the TRA liability, there are several assumptions that would be relevant in the ultimate determination of the amount of our TRA liability, such as, no material changes in relevant tax law, that there are no future redemptions or exchanges to Class A Units and that we earn sufficient taxable income to realize all tax benefits that are subject to the TRA. Under these assumptions, the tax savings associated with acquisitions of Legacy WMH common units in the Business Combination and subsequent exchanges as of December 31, 2025, equal approximately $165.0 million, determined as
of December 31, 2025. Under this scenario, we would be required to pay certain Class A Unit holders approximately 85% of such amount, or $138.9 million.
As of December 31, 2025, the Company had federal and state net operating loss (“NOL”) carryforwards of approximately $121.0 million and $109.5 million, respectively, available to reduce future taxable income, if any. The federal NOLs carry forward indefinitely and the state NOLs will begin to expire in 2041.
As of December 31, 2025, the Company had federal and California research and development (“R&D”) tax credit carryforwards of $6.1 million and $3.0 million, respectively, available to reduce future tax. Federal R&D credits begin to expire in 2041 and California R&D credits carry forward indefinitely.
Utilization of the Company's NOL carryforwards and R&D credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986 ("Section 382") as well as similar state provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and taxes, respectively. In general, an ownership change as defined by Section 382 results from transactions increasing the ownership of certain 5% shareholders or public groups in the stock of a corporation by more than 50% over a three-year period. Since its formation, the Company has raised capital through the issuance of capital stock on several occasions. These financings, combined with the purchasing shareholders' subsequent disposition of those shares, could result in a change of control as defined by Section 382.
On July 4, 2025, President Trump signed into law legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14”), commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant tax law changes, primarily extending or modifying various provisions originally enacted under the 2017 Tax Cuts and Jobs Act.
The OBBBA includes business tax provisions that are relevant to the Company such as the restoration of immediate expensing of domestic research and experimental expenditures incurred in tax years beginning after 2024, accelerated deduction of certain capitalized domestic research and experimental expenditures incurred in prior tax years and the permanent reinstatement of 100% bonus depreciation for qualified property placed in service after January 19, 2025. As result of the OBBBA, the Company benefits from accelerating deductions of previously capitalized domestic research and development costs such that it does not have any significant income taxes. The Company has recognized the effects of the OBBBA in the third quarter of 2025.
Unrecognized Tax Benefits
The Company follows the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes. ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return.
The Company recognizes both accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company has not recorded any interest and penalties on any unrecognized tax benefits since its inception. Tax years 2021 through 2024 remain open to examination by major taxing jurisdictions to which the Company is subject, which is primarily in the United States (U.S.), as carryforward attributes generated in prior years may still be adjusted upon examination by the Internal Revenue Service (IRS) or state tax authorities if they have or will be used in a future period. The Company files income tax returns in the U.S. federal and various state jurisdictions. There are currently no federal or state audits in progress by the IRS or any other jurisdictions for any tax years.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
December 31, 2025December 31, 2024
Unrecognized tax benefits at beginning of year$1,315 $1,024 
Additions/reductions related to prior year tax provisions43 (34)
Additions/reductions related to current year tax provisions362 325 
Unrecognized tax benefits at end of year$1,720 $1,315