Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

(in thousands)	December 31, 2025		December 31, 2024
Loss before provision for income taxes
United States	$	(74,402)	$	(89,435)
Foreign	(2,488)		(2,012)
	$	(76,890)	$	(91,447)

Our total provision for income taxes consists of the following for the years ended December 31, 2025 and 2024:

(in thousands)	December 31, 2025		December 31, 2024
Current:
Federal	$	—	$	—
State	64		9
Foreign	276		950
	340		959
Deferred
Federal	—		—
State	—		—
Foreign	53		912
	53		912
Total provision for income taxes	$	393	$	1,871

We adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements To Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU

2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:

(in thousands)	Amount		Percent
U.S. federal statutory tax rate	$	(16,147)	21.0	%
State and local income taxes, net of federal income tax effect (1)	$	50	(0.1)	%
Foreign tax effects	$	492	(0.6)	%
Effect of changes in tax laws or rates enacted in the current period	$	—	—	%
Effects of cross-border tax laws	$	—	—	%
Tax credits	$	—	—	%
Changes in valuation allowance	$	15,066	(19.6)	%
Nontaxable or nondeductible items			—	%
Share-based payment awards	$	947	(1.2)	%
Other	$	(15)	—	%
Changes in unrecognized tax benefits	$	—	—	%
Effective tax rate	$	393	(0.5)	%

(1) State taxes in Massachusetts and Texas made up the majority (greater than 50 percent) of the tax effect in this category.

The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024:

(in thousands)	December 31, 2024
Income tax benefit at statutory rate	21.00	%
State income taxes-net of federal benefit	2.71	%
Foreign rate differential	(1.79)	%
Stock-based compensation	(1.73)	%
Charitable contribution	0.04	%
Return to provision and other	(2.56)	%
Uncertain tax positions	0.10	%
Tax credits	(0.38)	%
Other	0.85	%
Valuation allowance	(20.29)	%
Effective tax rate	(2.05)	%

Significant components of our net deferred tax assets as of December 31, 2025 and 2024, which are included in other assets in the consolidated balance sheets, are as follows:

(in thousands)	December 31, 2025		December 31, 2024
Deferred tax asset:
Inventory	$	1,551	$	1,760
Accruals	491		1,182
Stock-based compensation	1,253		904
Net operating loss carryforwards	95,617		66,416
R&D credits	4,696		4,696
Charitable contributions	1,553		2,292
Intangibles	657		711
Deferred revenue	343		888
Advertising	1,769		1,769
Intercompany payable	552		552
Lease liability	5,316		13,562
Section 174 capitalized costs	2,952		7,787
Depreciation	1,903		6,502
Other	1,291		799
Total gross deferred tax assets	119,944		109,820
Less: valuation allowance	(116,187)		(99,344)
Total deferred tax assets	3,757		10,476
Deferred tax liabilities:
Prepaid expenses	(169)		(560)
Right-of-use assets	(3,079)		(9,353)
Total deferred tax liabilities	(3,248)		(9,913)
Net deferred tax assets	$	509	$	563

We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between the financial reporting and income tax bases of assets and liabilities.

Because we have a recent history of pre-tax book losses and are expected to be in pre-tax book loss in the immediate future, both of which are considered significant negative evidence, the deferred tax assets in the United States and certain foreign jurisdictions have been reduced by a valuation allowance to an amount that is more likely than not to be realized.

The United States federal tax rules generally provide for a 100% deduction for dividends received from foreign subsidiaries. Nevertheless, companies must still apply the guidance of ASC 740 to account for the tax consequences of outside basis differences and other tax impacts of their investments in foreign subsidiaries, including potential state income tax and foreign withholding taxes on distributions. As of December 31, 2025, we no longer consider the unremitted earnings of our foreign subsidiaries to be permanently reinvested, with the exception of Allbirds UK. The unremitted earnings of these entities is not significant and would not result in material incremental taxes if such earnings were repatriated back to the US.

A tabular reconciliation of the total amounts of unrecognized tax benefits for the year presented is as follows:

(in thousands)	December 31, 2025		December 31, 2024
Unrecognized tax benefits - at beginning of year	$	1,781	$	1,925
Increases in balances related to tax positions taken in prior years	—		—
Decreases in balances related to tax positions taken in prior years	—		(144)
Increases in balances related to tax positions taken in current year	—		—
Unrecognized tax benefits - at end of year	$	1,781	$	1,781

We follow the guidance for accounting for uncertainty in income taxes in accordance with FASB ASC 740, which clarifies uncertainty in income taxes recognized in an enterprise’s financial statements. The standard also prescribes a recognition threshold and measurement standard for the financial statement recognition and measurement of an income tax position taken, or expected to be taken, in an income tax return. Only tax positions that meet the more likely than not recognition threshold may be recognized. In addition, the standard provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. As of December 31, 2025 and 2024, the balance of unrecognized tax benefits of $1.8 million and $1.8 million, respectively, relate to tax credits that, if recognized, would be in the form of a carryforward which is expected to require a full valuation allowance based on present circumstances. Therefore, these unrecognized tax benefits would not have an effect on the effective tax rate. The unrecognized tax benefits are not expected to materially change in the next twelve months. The total amounts of interest and penalties recognized for the years ended December 31, 2025 and 2024 were not material. Our tax years for 2019 through 2024 are still subject to examination by the tax authorities.

At December 31, 2025, we had income tax net operating loss carryforwards for our U.S. federal, state, and foreign operations of approximately $367.8 million, $278.4 million, and $12.0 million respectively. At December 31, 2024, we had income tax net operating loss carryforwards for our U.S. federal, state, and foreign operations of approximately $248.4 million, $215.4 million, and $7.7 million, respectively. The federal tax loss carryforwards do not expire. The state and foreign tax loss carryforwards will begin to expire in 2026 and 2029, respectively.

At December 31, 2025, we had federal and state research and development credit carryforwards of $4.0 million and $2.9 million, respectively. The federal tax credit carryforwards will begin to expire in 2036. The state tax credit carryforwards do not expire.

Utilization of some of the federal and state NOL and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the IRC and similar state provisions. We do not anticipate these limitations, if any, will significantly impact our ability to utilize the NOLs and tax credit carryforwards.

We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025:

(in thousands)	December 31, 2025
Federal Taxes:	$	—
State Taxes:
Texas	30
New York	13
Tennessee	6
Massachusetts	28
Other States	17
Foreign Taxes:
United Kingdom	(51)
Hong Kong	12
China	103
New Zealand	(36)
Netherlands	59
Korea	26
Japan	(95)
Other	4
Net cash paid for taxes	116

Cash paid during the year for income taxes for the year ended December 31, 2024 was $1.7 million.