Company: GDOT
Filing Date: 2025-03-04
Form Type: 10-K
Source: 0001386278-25-000009
Chunk: 85

Company: GREEN DOT CORP
Filing Date: 2025-03-04
Form: 10-K
Item: Item 7
Chunk 85
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 income tax expense totaled $4.2 million for the year ended December 31, 2024, representing a decrease of $3.7 million from the comparable prior year period. The decrease in income tax expense was primarily driven by the decrease in our taxable income and a lower effective tax rate.

The net decrease in the effective tax rate for the year ended December 31, 2024 from the prior year comparable period was primarily due to a decrease of $2.9 million in the amount of compensation expense subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease of $0.8 million in state income tax expense, net of federal benefits, and the impact of general business credits. These decreases were partially offset by an increase of $2.9 million in the expense related to tax shortfalls from stock-based compensation, an increase of $0.8 million in the expense related to nondeductible penalties, an increase of $0.4 million in the valuation allowance on a portion of our unrealized loss on equity securities, and the surrender of our existing bank owned life insurance policies which resulted in a tax charge of $1.5 million and surrender penalties of $0.7 million. The increases in nondeductible penalties for the years ended December 31, 2024 and 2023 are primarily related to the tax effect associated with the civil money penalty under the Consent Order.

Our effective tax rate for the year ended December 31, 2024 is lower than our statutory federal income tax rate primarily due to a reduction in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation, cash value growth in bank owned life insurance policies, and higher tax benefits from general business credits partially offset by the expense associated with tax shortfalls from stock-based compensation, the expense related to nondeductible penalties, an increase in the valuation allowance on a portion of our unrealized loss on equity securities, and the expense from the surrender of our existing bank owned life insurance policies. Our negative effective tax rate for the year ended December 31, 2024 was the result of our loss before income taxes of $22.5 million and the tax effect of the civil money penalty under the Consent Order.

Our effective tax rate for the year ended December 31, 2023 is higher than our statutory federal income tax rate primarily due to the expense associated with tax shortfalls from stock-based compensation,