Income Taxes (Tables)

3 Months Ended

Mar. 31, 2026

Schedule of Deferrred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities are as follows:


	March 31, 2026		December 31, 2025

Deferred tax asset:
Net operating loss (1)	$	1,324,828	$	-
Claims reserve discount	1,869,846		1,562,424
Unearned premium	5,940,838		4,948,868
Deferred ceding commission revenue	591,873		1,756,131
Net unrealized losses on securities	2,570,317		1,811,373
Other	846,136		916,350
Total deferred tax assets	13,143,838		10,995,146

Deferred tax liability:
Investment in KICO (2)	759,543		759,543
Deferred policy acquisition costs	5,837,947		5,852,113
Intangible assets	105,000		105,000
Depreciation and amortization	122,461		98,931
Total deferred tax liabilities	6,824,951		6,815,587

Net deferred income tax asset	$	6,318,887	$	4,179,559

(1)The deferred tax assets from federal current year net operating loss ("NOL"), and state current year and prior years NOL carryovers are as follows:


Type of NOL	March 31, 2026		December 31, 2025		Expiration

Federal only, current year	$	1,324,828	$	-	None

State only (A)	3,484,099		3,421,252		December 2027 - December 2045
Valuation allowance	(3,484,099)		(3,421,252)
State only, net of valuation allowance	-		-

Total deferred tax asset from net operating loss carryovers	$	1,324,828	$	-

(A)Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of March 31, 2026 and December 31, 2025 was $53,601,524 and $52,634,646, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of income and comprehensive income within other underwriting expenses. Kingstone has recorded a full valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2045.

(2)Deferred tax liability – Investment in KICO

On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the

accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543 upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged.

Schedule of Net Operating Loss Carryovers

The deferred tax assets from federal current year net operating loss ("NOL"), and state current year and prior years NOL carryovers are as follows:


Type of NOL	March 31, 2026		December 31, 2025		Expiration

Federal only, current year	$	1,324,828	$	-	None

State only (A)	3,484,099		3,421,252		December 2027 - December 2045
Valuation allowance	(3,484,099)		(3,421,252)
State only, net of valuation allowance	-		-

Total deferred tax asset from net operating loss carryovers	$	1,324,828	$	-