Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

The components of loss before income taxes were as follows:

The components of the benefit for income taxes were as follows:


	Year Ended December 31,
	2025		2024		2023
	(in thousands)
Current benefit for income taxes:
Singapore	$	—	$	—	$	—
Rest of world		—		—		677
Total current benefit for income taxes	$	—	$	—	$	677
Deferred benefit for income taxes:
Singapore	$	—	$	—	$	—
Rest of world		—		—		—
Total deferred benefit for income taxes	$	—	$	—	$	—
Total benefit for income taxes	$	—	$	—	$	677

The components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:


	December 31,
	2025			2024
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	243,030		$	177,639
Federal and state tax credits		24,462			15,800
Share-based compensation		9,797			8,649
Accumulated amortization		465			578
Operating lease liabilities		4,354			6,626
Deferred revenue		5,445			8,836
Capitalized research and development		35,255			54,035
Accumulated depreciation		4,118			3,873
Other		2,821			942
Total deferred tax assets		329,747			276,978
Valuation allowance		(326,689	)		(272,313	)
Net deferred tax assets		3,058			4,665
Deferred tax liabilities:
Operating lease right-of-use assets		(3,054	)		(4,661	)
Other		(4	)		(4	)
Total deferred tax liabilities		(3,058	)		(4,665	)
Net deferred tax assets (liabilities)	$	—		$	—

A roll-forward of the valuation allowance for the years ended December 31, 2025 and 2024 is as follows:


	Year Ended December 31,
	2025		2024
	(in thousands)
Balance at beginning of year	$	272,313	$	247,193
Increase in valuation allowance		54,376		25,169
Effect of foreign currency translation		—		(49	)
Balance at end of year	$	326,689	$	272,313

A summary of activity in the Company’s gross unrecognized tax benefits, excluding interest and penalties, is as follows:


	2025			2024		2023
	(in thousands)
Unrecognized tax benefit at the beginning of the year	$	20,798		$	15,790	$	13,945
Tax positions related to prior years		(114	)		2,091		114
Tax positions related to the current year		3,256			2,917		1,731
Tax position releases		(2,569	)		—		—
Unrecognized tax benefit at the end of the year	$	21,371		$	20,798	$	15,790

A reconciliation of the Singapore statutory income tax rate to the Company’s effective income tax rate is as follows:


	Year Ended December 31,
	2025
	Amount			Percent
Singapore statutory income tax rate	$	(34,744	)		17.0	%
Foreign tax effects
United States
Statutory tax rate difference between U.S. federal and Singapore		(5,078	)		2.5
Tax Credits
Research and development tax credits		(4,962	)		2.4
Orphan drug credit		(3,675	)		1.8
Change in valuation allowances		32,422			(15.9	)
Nontaxable or nondeductible items
Nondeductible executive compensation		2,700			(1.3	)
Stock compensation		(1,945	)		1.0
Other1		2,298			(1.1	)
UK
Statutory tax rate difference between the United Kingdom and Singapore		(5,409	)		2.6
Research and development		(1,836	)		0.9
Changes in valuation allowances		18,742			(9.2	)
Other		59			—
Other Foreign Jurisdictions		(5	)		—
Changes in valuation allowances		2,069			(1.0	)
Nontaxable or nondeductible items		(1,042	)		0.5
Changes in unrecognized tax benefits		406			(0.2	)
Effective income tax rate		—			0.0	%

(1) Includes United States state and local income taxes, net of federal income tax effect.

A reconciliation of the Singapore statutory income tax rate to the Company’s effective income tax rate is as follows:


	Year Ended December 31,
	2024			2023
Singapore statutory income tax rate		17.0	%		17.0	%
Federal and state tax credits		9.8			11.5
Permanent differences		(3.1	)		—
Changes in reserves for uncertain tax positions		(6.0	)		(2.8	)
Foreign rate differential		7.2			7.4
Tax rate change		(2.2	)		0.4
Return to provision		0.9			4.4
Other		(0.4	)		0.1
Change in deferred tax asset valuation allowance		(26.0	)		(36.1	)
Deferred tax adjustments		2.8			(0.7	)
Effective income tax rate		0.0	%		1.2	%

Wave Life Sciences Ltd. 10-K