v3.25.4
TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
TAXES TAXES
Loss before income taxes summarized by region was as follows:
Year Ended
(in thousands)
December 31,
2025
December 31,
2024
December 31,
2023
United States$(540,192)$(2,165,006)$(1,509,885)
Foreign5,688 2,645 2,249 
Loss before benefit from income taxes
$(534,504)$(2,162,361)$(1,507,636)
The benefit from income taxes consisted of the following:
Year Ended
(in thousands)
December 31,
2025
December 31,
2024
December 31,
2023
Current taxes:
Federal$1,125 $— $— 
Foreign— (1,628)(3,798)
Total current income tax expense/(benefit)
$1,125 $(1,628)$(3,798)
Deferred taxes:
Federal$(111,750)$(92,184)$(22,019)
State(15,528)(41,544)(16,134)
Total deferred income tax benefit
(127,278)(133,728)(38,153)
Benefit from income taxes
$(126,153)$(135,356)$(41,951)
The benefit from income taxes reconciles to the amount computed by applying the federal statutory rate to loss before income taxes as follows:
Year Ended
December 31,
2025
December 31,
2024
December 31,
2023
(in thousands)
Tax at federal statutory rate
$
(112,246)
21.0 %
$
(454,122)
21.0 %
$
(316,603)
21.0 %
State, net of federal benefit(1)
(11,190)2.1 %(29,235)1.4 %(13,283)0.9 %
Tax credits
Research tax credits
(3,589)0.7 %(7,145)0.3 %(1,827)0.1 %
Change in valuation allowance
111 — %166,475 (7.7)%160,664 (10.7)%
Nontaxable or nondeductible items
Goodwill impairment
— — %186,641 (8.6)%127,778 (8.5)%
Stock compensation
(5,920)1.1 %88 — %134 — %
Other
6,681 (1.3)%1,942 (0.1)%1,186 — %
Total tax benefit from income taxes
$(126,153)23.6 %$(135,356)6.3 %$(41,951)2.8 %
(1) State taxes in California, Georgia, New York, New York City, and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.
Significant components of deferred tax assets and liabilities were as follows:
(in thousands)December 31, 2025December 31, 2024
Deferred tax assets:
Net operating losses$147,070 $43,707 
Tax credits14,047 7,963 
Other accruals and reserves6,671 5,727 
Stock compensation9,992 9,320 
Capitalized U.S. research and development expenses
16,497 23,088 
Other amortization53,792 57,401 
Operating lease liabilities13,689 16,539 
Property & equipment392 2,063 
Other876 1,026 
Total gross deferred tax assets263,026 166,834 
Valuation allowance on deferred tax assets(6,938)(7,744)
Total deferred tax assets$256,088 $159,090 
Deferred tax liabilities:
Purchased intangible amortization$(461,714)$(488,874)
Operating lease right-of-use assets(12,957)(16,076)
Total deferred tax liabilities(474,671)(504,950)
Deferred tax liability, net$(218,583)$(345,860)
A valuation allowance is established when it is more likely than not that the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis and includes a review of all available positive and negative evidence, including operating results and future reversals of existing taxable temporary differences such as the deferred tax liabilities related to purchased intangibles. Based on the available evidence as of December 31, 2025, the Company was not able to conclude it is more likely than not certain deferred tax assets will be realized. Therefore, a valuation allowance of $6.9 million was recorded against certain federal, state, and foreign deferred tax assets.
As of December 31, 2025, the net operating loss carryforwards for federal and state tax purposes were $567.0 million and $424.2 million. Net operating loss carryforwards for state tax purposes will begin to expire in 2034 unless utilized prior. The federal and state tax credit carryforwards were $13.0 million and $6.8 million. The federal credits will begin to expire in 2044 unless utilized prior. The state credits do not expire and can be carried forward indefinitely. GRAIL’s UK subsidiary had $16.0 million of UK net operating losses that can generally be carried forward indefinitely provided that the UK entity maintains its existing trade or business.
Pursuant to Section 382 and 383 of the Internal Revenue Code, utilization of net operating losses and credits may be subject to annual limitations in the event of any significant future changes in its ownership structure. These annual limitations may result in the expiration of net operating losses and credits prior to utilization.
The following table summarizes the gross amount of uncertain tax positions:
Year Ended
(in thousands)
December 31,
2025
December 31,
2024
December 31,
2023
Balance at beginning of year$3,859 $59,295 $51,843 
Decreases related to the Spin-Off
— (59,295)— 
Decreases related to prior year tax positions
(46)— — 
Increases related to current year tax positions
3,823 3,859 7,452 
Balance at end of year$7,636 $3,859 $59,295 
Included in the balance of uncertain tax positions as of December 31, 2025, December 31, 2024, and December 31, 2023 were $7.1 million, $3.6 million, and $54.4 million, of net unrecognized tax benefits that, if recognized, would reduce the effective income tax rate in future periods. The Company has not recognized any interest or penalties related to uncertain tax positions. If interest and penalties are recognized in the future, such amounts will be included in the provision for income taxes.
The following table presents the disaggregation of income taxes paid by jurisdiction:
(in thousands)December 31, 2025
Federal
$— 
New York
492 
Massachusetts
176 
South Carolina
148 
New York City
139 
North Carolina
80 
Tennessee
73 
All Other States
23 
Total taxes paid
$1,131 
Tax years 2019 to 2025 remain subject to future examination by the major tax jurisdictions in which the Company is subject to tax.