v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company is the sole managing member of OppFi-LLC and, as a result, consolidates the financial results of OppFi-LLC. OppFi-LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, OppFi-LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by OppFi-LLC is passed through to and included in the taxable income or loss of its Members, including OppFi, on a pro rata basis. OppFi is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of OppFi-LLC, as well as any stand-alone income or loss generated by OppFi.

The following table summarizes income tax expense for the years ended December 31, 2025, 2024 and 2023 (in thousands):

202520242023
Current income tax expense:
Federal$4,008 $503 $27 
State1,118 248 480 
Total current income tax expense5,126 751 507 
Deferred income tax expense:
Federal4,612 3,118 1,058 
State147 346 766 
Total deferred income tax expense4,759 3,464 1,824 
Total income tax expense$9,885 $4,215 $2,331 
The following table summarizes the differences between the effective income tax rate and the federal statutory income tax rate of 21% for the years ended December 31, 2025, 2024 and 2023 (dollars in thousands):

202520242023
AmountPercentageAmountPercentageAmountPercentage
U.S. federal statutory tax rate$32,788 21.0 %$18,491 21.0 %$8,780 21.0 %
State and local income tax, net of federal income tax effect (1)
1,094 0.7 590 0.6 1,239 3.0 
Foreign tax effects— — — — — — 
Effect of changes in tax laws or rates enacted in the current period— — — — — — 
Effect of cross-border tax laws— — — — — — 
Tax credits(241)(0.1)(104)(0.1)(72)(0.2)
Changes in valuation allowances— — — — — — 
Nontaxable or nondeductible items
Issuance of warrants2,383 1.5 1,731 2.0 1,045 2.5 
Others(278)(0.2)(279)(0.3)122 0.3 
Changes in unrecognized tax benefits60 — 26 — 18 — 
Effect of flow-through entity(25,919)(16.6)(16,149)(18.3)(8,831)(21.1)
Other adjustments(2)— (91)(0.1)30 0.1 
Effective tax rate$9,885 6.3 %$4,215 4.8 %$2,331 5.6 %
(1) For the year ended December 31, 2025, state income taxes in California, Florida, Illinois, Michigan, Minnesota, New Jersey, and Texas made up greater than 50% of the tax effect in this category. For the year ended December 31, 2024, state income taxes in Florida, Texas, and Virginia made up greater than 50% of the tax effect in this category. For the year ended December 31, 2023, state income taxes in California, Florida, Michigan, Tennessee, Texas, and Virginia made up greater than 50% of the tax effect in this category.

The following table summarizes the income taxes paid for the years ended December 31, 2025, 2024, and 2023 (in thousands):

202520242023
Federal$5,389 $41 $54 
State
Texas*232 *
North Carolina*110 *
Oregon**14 
Other states704 92 5 
Total income taxes paid$6,093 $475 $73 
* The amount of income taxes paid during the year did not meet the 5% disaggregation threshold.
Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of deferred tax asset as of December 31, 2025 and 2024 were as follows (in thousands):

20252024
Investment in partnership$21,727 $14,076 
Tax receivable agreement liability9,5496,216 
Accrued legal expense540— 
Intangibles447479 
Stock compensation192107 
Net operating loss—366 
Other19296 
Deferred tax asset$32,647 $21,340 

As of December 31, 2025, OppFi had utilized all federal and state net operating loss carryovers from prior years. As of December 31, 2024, OppFi had approximately $1.3 million of federal net operating loss carryovers and $1.9 million of state net operating loss carryovers.

At the time of the Business Combination, OppFi recorded a deferred tax asset of $18.9 million with an offset to additional paid-in capital for the difference between the book value and the tax basis of OppFi’s investment in OppFi-LLC. As of December 31, 2025, the related deferred tax asset was $21.7 million. The increase was due to subsequent exchanges and differences between book and taxable income. Based on the Company’s cumulative earnings history and forecasted future sources of taxable income, the Company believes that it will be able to realize the deferred tax assets in the future. As the Company reassesses this position in the future, changes in cumulative earnings history, excluding non-recurring charges, or changes to forecasted taxable income may alter this expectation and may result in an increase in the valuation allowance and an increase in the effective tax rate.

In connection with the Business Combination, the Company entered into the TRA, which provides for payment to the Members of 90% of the U.S. federal, state and local income tax savings realized by the Company as a result of the increases in tax basis and certain other tax benefits related to the transactions contemplated under the Business Combination Agreement and the exchange of Retained OppFi Units for Class A Common Stock or cash. The Company has in effect an election under Section 754 of the Internal Revenue Code and will have such an election effective for each taxable year in which a redemption or exchange (including deemed exchange) of OppFi-LLC interests for shares of Class A Common Stock or cash occurs. The Company will retain the benefit of the remaining 10% of these cash savings. For the period from the closing date of the Company’s business combination through December 31, 2025, the TRA liability increased by $13.3 million (net of a $1.0 million payment) related to exchanges that occurred during that period. The increased expected benefit of the TRA payments resulted in an increase of the deferred tax asset of $3.3 million, with a net offsetting entry to additional paid-in capital and current period expense.

As of December 31, 2025 and 2024, OppFi had unrecognized tax benefit of $0.2 million and $0.1 million, respectively, related to research and development credits allocated from OppFi-LLC. FASB ASC 740, Income Taxes, prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2025 and 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The following table summarizes the change in unrecognized tax benefits as of December 31, 2025 and 2024 (in thousands):

20252024
Unrecognized tax benefits at beginning of the year$103 $38 
Additions based on tax positions related to the current year76 27 
Additions for tax positions of prior years49 38 
Reductions for tax positions of prior years— — 
Settlements with taxing authorities— — 
Other, net— — 
Net change in unrecognized tax benefits125 65 
Unrecognized tax benefits at end of the year$228 $103 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA did not have a material impact on the Company’s income tax expense for the year ended December 31, 2025.