INCOME TAXES

3 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income tax was an expense of $0.1 million and $0.7 million, for the three months ended March 31, 2025 and 2024 respectively. The impact from income taxes varies from the federal statutory rate of 21.0% due to state income taxes, changes in the valuation allowance for deferred tax assets and adjustments for permanent differences. The expense for both periods largely relates to estimated state income taxes attributable to income earned in separate filing states without state net operating loss carryforwards and in combined filing states that restrict which entities within the group may use specific net operating loss carryforwards.

We assess whether sufficient future taxable income will be generated to permit the use of deferred tax assets. This assessment includes consideration of the cumulative losses incurred over the three-year period ended March 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future earnings. On the basis of this evaluation, we have recorded a valuation allowance for deferred tax assets to the extent that they cannot be supported by reversals of existing cumulative temporary differences. Any federal tax benefit generated from losses in 2025 is expected to require an offsetting adjustment to the valuation allowance for deferred tax assets, and thus have no net effect on the income tax provision.