Income Taxes

6 Months Ended

Jun. 30, 2025

Income Taxes

Income Taxes

11. Income Taxes

For financial reporting purposes, the Company’s effective tax rate used for the interim periods is based on the estimated full-year income tax rate. For the three and six months ended June 30, 2025, the Company’s effective tax rate differs from the statutory rate primarily due to the valuation allowance recorded against the net deferred tax asset balance.

For each of the six months ended June 30, 2025 and 2024, the Company recorded income tax expense of $0.1 million. The effective tax rate is (0.7)% and (78.8)% for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, the Company was not under examination by any taxing authority.

As of June 30, 2025 the Company had unrecognized tax benefits of $3.4 million, of which $1.6 million would currently affect the Company’s effective tax rate if recognized due to the Company’s deferred tax assets being fully offset by a valuation allowance. The Company does not anticipate that the amount of unrecognized tax benefits relating to tax positions existing as of June 30, 2025 will significantly increase or decrease within the next twelve months. There was no interest expense or penalties related to unrecognized tax benefits recorded as of June 30, 2025.

A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome. The Company adjusts these reserves, as well as the related interest, considering changing facts and circumstances.