Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

The components of loss before income taxes were as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
Domestic	$	(37,688)	$	(1,860)	$	(11,383)
Foreign	(11,984)		(28,203)		(11,483)
Total	$	(49,672)	$	(30,063)	$	(22,866)

Schedule of Provision for (Benefit from) Income Taxes

The components of provision for (benefit from) income taxes for all periods presented were as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
Federal	$	—	$	—	$	—
State	209		336		761
International	3,104		2,048		1,121
Total current income tax expense	$	3,313	$	2,384	$	1,882

Federal	$	(369)	$	(350,567)	$	—
State	(10,742)		(105,060)		(7)
International	(1,620)		(4,405)		(1,658)
Total deferred income tax benefit	$	(12,731)	$	(460,032)	$	(1,665)

Federal	(369)		(350,567)		—
State	(10,533)		(104,725)		754
International	1,484		(2,356)		(537)
Total provision for (benefit from) income taxes	$	(9,418)	$	(457,648)	$	217

Schedule of Provision for Income Taxes Differs from Amount Computed by Statutory Federal Rate

A reconciliation of the provision for (benefit from) income taxes to the amount computed by applying the 21% U.S. federal income tax rate to income (loss) before income taxes after the adoption of ASU 2023-09 is as follows (in thousands, except percentages):


	Year Ended December 31,
	2025
Tax at U.S. federal statutory rate	$	(10,431)	21.0	%
Domestic federal reconciling Items
Tax credits
Research and development credits	(1,519)		3.1	%
Nontaxable and nondeductible items, net
Executive compensation deduction limitations	17,627		(35.5	%)
Share-based payment awards	(6,142)		12.4	%
Non-controlling interest	329		(0.7	%)
Other	867		(1.7	%)
Other reconciling items	(122)		0.2	%
Domestic state and local income taxes, net of federal effect(1)	(10,227)		20.6	%
Foreign reconciling items
France
Foreign rate differential	(351)		0.7	%
Changes in valuation allowance	1,847		(3.7	%)
Other	(288)		0.5	%
United Kingdom
Share-based payment awards	(771)		1.6	%
Other	18		0.0	%
Other foreign jurisdictions	435		(0.9	%)
Worldwide changes in prior year unrecognized tax benefits	(690)		1.4	%
Effective tax rate	$	(9,418)	19.0	%

(1) The state and local jurisdictions that contribute to the majority of the tax effect in this category include New York State, New York City, and California.

A reconciliation of the provision for (benefit from) income taxes to the amount computed by applying the 21% U.S. federal income tax rate to income (loss) before income taxes for years prior to the adoption of ASU 2023-09 is as follows (in thousands, except percentages):


	Year Ended December 31,
	2024			2023
Tax at U.S. federal statutory rate	$	(6,313)		$	(4,802)
Non-controlling interest	(768)			349
State taxes	1,498			(1,583)
Foreign rate differential	(320)			16
Executive compensation deduction limitations	10,876			10,985
Share-based payment awards	(3,860)			(1,604)
Permanent items	(9)			185
Nondeductible TRA payments	6,983			—
Tax credits and incentives	(2,749)			(3,442)
Return to provision	1,393			70
Changes in tax law	6,552			(3,303)
Changes in prior year unrecognized tax benefits	(2,260)			(487)
Valuation allowance	(468,549)			3,804
Other	(122)			29
Total	$	(457,648)		$	217
Effective tax rate	1522.3		%	(0.9		%)

Schedule of Significant Components of Deferred Income Tax Assets

Deferred income taxes result from differences in the recognition of amounts for tax and financial reporting purposes, as well as operating loss and tax credit carryforwards. Significant components of our deferred income tax assets and liabilities are as follows (in thousands):


	Year Ended December 31,
	2025		2024
Investment in Partnership	$	485,193	$	513,945
Loss and tax credit carryforwards	214,059		92,670
Equity-based compensation	14,813		12,465
Lease liability	5,305		4,061
Other	1,271		1,938
Total deferred tax assets	$	720,641	$	625,079
Valuation allowance	(14,110)		(13,973)
Net deferred tax asset	$	706,531	$	611,106

Intangible assets	$	(4,756)	$	(5,171)
Right of use asset	(5,203)		(3,964)
Revenue	(829)		(735)
Other	—		(46)
Total deferred tax liabilities	$	(10,788)	$	(9,916)
Net deferred tax assets	$	695,743	$	601,190

Schedule of Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
Balance - Beginning of Year	$	7,032	$	6,865	$	3,932
Increases related to current year's tax positions	1,929		2,497		2,423
Increases related to business combinations	3,194		—		666
Increases (decreases) related to prior year's tax positions	(93)		(39)		182
Decreases related to lapse of statute	(617)		(2,291)		(487)
Increases related to exchanges	—		—		149
Balance - End of Year	$	11,445	$	7,032	$	6,865

Schedule of Amounts of Cash Income Taxes Paid

The amounts of cash income taxes paid by the Company after the adoption of ASU 2023-09 were as follows (in thousands):


	Year Ended December 31, 2025
U.S. Federal	$	—
Domestic state and local
New York City, New York	175
Other	254
Foreign
India	1,943
Hong Kong	680
United Kingdom	319
Other	115
Total	$	3,486

Clearwater Analytics Holdings, Inc. 10-K