Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Domestic and International Pre-Tax Loss

Domestic and international pre-tax loss consists of the following (in thousands):


	Year Ended December 31,
	2025		2024		2023
United States	$	(41,436)	$	(133,926)	$	(168,189)
International	—		—		—
Loss before income taxes	$	(41,436)	$	(133,926)	$	(168,189)

Schedule of Components of Company's Tax Provision

The components of the Company’s income tax provision were as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
Current:
Federal	$	—	$	—	$	—
State	363		276		283
Total current tax expense	363		276		283
Deferred:
Federal	—		—		—
State	—		—		—
Total deferred tax expense	—		—		—
Total provision for income taxes	$	363	$	276	$	283

Schedule of Reconciliation of Company's Effective Tax Rate To Statutory Federal Rate

The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the Company's U.S. Federal statutory income tax amount and rate to its actual effective amount and rate for the year ended December 31, 2025:


	Year Ended December 31, 2025
	(in thousands)		Percent
Tax at federal statutory rate	$	(8,834)	21.0	%
State taxes, net of federal effect (1)	363		(0.9)	%
Tax credits
Research and development credits	(410)		1.0	%
Valuation allowance	2,664		(6.3)	%
Nondeductible Items
Section 162(m) compensation limitation	3,609		(8.6)	%
Warrant liability fair value adjustment	7,512		(17.9)	%
Other contributing items	1,444		(3.5)	%
Other adjustments	(106)		0.3	%
Stock-based compensation	(5,879)		14.0	%
Effective tax rate	$	363	(0.9)	%

(1) State taxes in Texas make up the majority (greater than 50%) of the tax effect in this category.

The following table presents the required disclosures prior to the Company's 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 and December 31, 2023 (in thousands):


	Year Ended December 31,
	2024		2023
Tax at federal statutory rate	$	(28,144)	$	(35,290)
State taxes, net of federal effect	(7,627)		(9,554)
Stock-based compensation	3,192		8,956
Non-deductible items	1,988		504
Tax credits	(169)		(531)

Warrant liability fair value adjustment	18,333		—

Provision to return adjustments	(1,927)		9,259
Valuation allowance	14,651		26,501
Other	(21)		438
Provision for income taxes	$	276	$	283

Schedule of Components of Deferred Tax Assets and Liabilities

The Company’s significant components of deferred tax assets and liabilities are as follows (in thousands):


	December 31,
	2025		2024
Deferred tax assets:
Net operating loss carryforwards	$	230,874	$	230,303
Fixed assets and intangibles	13,695		10,461
Capitalized research and development	13,936		18,679
Accruals and reserves	22,398		18,685
Stock options	1,169		1,536
Operating lease liabilities	24,361		29,424
Capped calls	14,241		15,011

Tax credits	3,248		2,738
Other	4,914		4,621
Gross deferred tax assets	328,836		331,458
Less: valuation allowance	(308,210)		(306,948)
Total deferred tax assets	20,626		24,510
Deferred tax liabilities:
Operating lease right-of-use assets	(18,332)		(21,641)

Other	(2,294)		(2,869)
Gross deferred tax liabilities	(20,626)		(24,510)
Net deferred tax assets	$	—	$	—

Schedule of Unrecognized Tax Benefits

The following table reflects the changes to the Company's unrecognized tax benefits (in thousands):


	December 31,
	2025		2024
Unrecognized tax benefits beginning balance	$	2,847	$	2,678
Increases related to current year tax positions	495		169
Increases related to prior year tax positions	278		—
Unrecognized tax benefits ending balance	$	3,620	$	2,847

Schedule of Income Taxes Paid

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


	Year Ended December 31, 2025
Federal	$	—
State and Local	331
Texas	185
All other states	146
Foreign	—
Income tax, net of amounts refunded	$	331

TheRealReal, Inc. 10-K