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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
(18) Income Taxes

The components of our loss before income taxes for the years ended December 31, 2024, 2023 and 2022 are as follows:
Year Ended December 31,
(in thousands)202420232022
Loss before income taxes:
Domestic$(160,709)$(239,971)$(110,610)
Foreign(89,287)(122,341)(10,199)
Total$(249,996)$(362,312)$(120,809)

The components of our income tax provision for the years ended December 31, 2024, 2023 and 2022 are as follows:

(in thousands)202420232022
Current:
U.S. federal$24 $135 $119 
State301 (50)(498)
Foreign2,820 1,686 5,037 
Total3,145 1,771 4,658 
Deferred:
U.S. federal— — — 
State— — — 
Foreign(952)(2,412)(2,518)
Total(952)(2,412)(2,518)
Total income tax (benefit) provision$2,193 $(641)$2,140 
The overall effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2024, 2023 and 2022 as follows:
% of Pretax (Loss) Income
202420232022
Tax provision based on the federal statutory rate21.0 %21.0 %21.0 %
Increase in valuation allowances(17.3)(6.5)(10.7)
Change in carryforward attributes— — (1.9)
Global intangible low-taxed income inclusion— (0.4)(0.5)
Non-deductible expenses— — (1.6)
Non-deductible earnout expense— 1.0 (2.8)
Goodwill impairment charge
(8.7)(14.6)— 
Foreign income tax rate differential0.2 0.5 (0.3)
Deemed income related to foreign operations(0.6)(0.3)(0.2)
Tax rate change(0.1)— (1.2)
Employee share-based payments(0.3)(0.5)(1.6)
Other(0.3)(0.7)0.4 
Deferred and payable adjustments1.3 (1.3)(1.7)
Non-deductible penalties— — (2.5)
State taxes, net of federal benefit, before valuation allowance1.2 0.7 1.4 
Return-to-provision adjustments(0.5)0.2 (0.2)
Other tax credits2.0 1.1 0.8 
Uncertain tax positions and audit settlements1.3 — (0.2)
Effective tax rate(0.8)%0.2 %(1.8)%

The difference between our effective tax rate for 2024 and 2023 and the federal statutory rate was 21.8 and 20.8 percentage points, respectively. The difference in the effective rate is primarily due to the net increase in valuation allowances and non-deductible goodwill impairment charges.

The difference between our effective tax rate for 2022 and the federal statutory rate was 22.8 percentage points. The difference in the effective rate is primarily due to valuation allowance changes and non-deductible expenses, including earnout expense and penalties.

On December 12, 2022, the European Union member states agreed to implement the Organization for Economic Co-operation and Development’s (“OECD”) Pillar Two global corporate minimum tax rate of 15% on companies with revenues of at least €750 million, which went into effect in 2024. Pillar Two does not impact the Company.

In 2024 we recorded full valuation allowances for 3DSystems GmbH and Kumovis GmbH, which are foreign subsidiaries of the Company. In addition, we released a valuation allowance for Oqton Belgium. In 2023, we recorded full valuation allowances for Wematter and Layerwise, which are foreign subsidiaries of the Company. In 2022, there was no significant change to our valuation allowance assertions. We continue to review results of operations and forecast estimates to determine if it is more likely than not that the deferred tax assets will be realized.
The components of our net deferred income tax assets and net deferred income tax (liabilities) at December 31, 2024 and 2023 are as follows:

(in thousands)20242023
Deferred income tax assets:
Intangible assets$15,685 $13,830 
Stock options and restricted stock awards3,032 5,409 
Reserves and allowances6,879 6,395 
Net operating loss carryforwards59,641 47,875 
Tax credit carryforwards31,326 25,286 
Accrued liabilities2,681 2,371 
Deferred revenue2,176 2,783 
Lease tax assets17,498 15,985 
Research expenditures capitalization44,773 30,601 
Other3,236 1,227 
Valuation allowance(168,299)(125,533)
Total deferred income tax assets18,628 26,229 
Deferred income tax liabilities:
Intangible assets2,081 8,688 
Property and equipment2,352 4,082 
Lease tax liabilities14,159 13,924 
Other49 467 
Total deferred income tax liabilities18,641 27,161 
Net deferred income tax liabilities
$(13)$(932)

At December 31, 2024, $59.6 million of our deferred income tax assets was attributable to $399.6 million of gross net operating loss carryforwards, which consisted of $102.9 million of loss carryforwards for U.S. federal income tax purposes, $176.6 million of loss carryforwards for U.S. state income tax purposes and $120.2 million of loss carryforwards for foreign income tax purposes.

The net operating loss carryforwards for U.S. federal income tax purposes do not expire. The net operating loss carryforwards for U.S. state income tax purposes begin to expire in 2025. In addition, certain net loss carryforwards for foreign income tax purposes begin to expire in 2025 and certain other loss carryforwards for foreign purposes do not expire.

At December 31, 2024, tax credit carryforwards deferred assets of $31.3 million consisted of $19.3 million of research and experimentation credit carryforwards for U.S. federal income tax purposes, $5.4 million of research and experimentation tax credit carryforwards for U.S. state income tax purposes, and $6.6 million of foreign tax credits for U.S. federal income tax purposes. Certain state research and experimentation and other state credits began to expire in 2023 and credits will continue to expire in 2024 and on, as the statutes expire for the various jurisdictions. We have recorded a valuation allowance related to the U.S. federal and state tax credits.

Due to the transition tax, our previously unremitted earnings have been subjected to U.S. federal income tax, although, other additional taxes such as, withholding tax, could be applicable. We intend to permanently reinvest our earnings outside the U.S. and as such, have not provided for any additional taxes on approximately $105.1 million of unremitted earnings. We believe the unrecognized deferred tax liability related to these earnings is approximately $5.1 million.
Including interest and penalties, the total net decrease of our unrecognized benefits is $2.2 million for the year ended December 31, 2024. The decrease was primarily related to the reversal of a prior year position related to a China tax position. We do not anticipate any additional unrecognized tax benefits during the next 12 months that would result in a material change to our consolidated financial position. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.3 million. We include interest and penalties in the consolidated financial statements as a component of income tax expense.

Unrecognized Tax Benefits(1)
(in thousands)202420232022
Balance at January 1$(18,604)$(17,150)$(17,261)
Increases related to prior year tax positions(1,170)(99)(192)
Decreases related to prior year tax positions4,337 107 508 
Decreases related to prior year tax positions as a result of lapse of statute
— 271 145 
Decreases related to settlement— — — 
Increases related to current year tax positions(976)(1,733)(269)
Increases related to acquired tax positions— — (119)
Decreases related to acquired tax positions— — 38 
Balance at December 31$(16,413)$(18,604)$(17,150)
(1) The unrecognized tax benefit balance as of December 31, 2024, 2023, and 2022 includes $1.3 million, $0.3 million, and $0.3 million of interest and penalty, respectively.

Tax years 2020 through 2023 remain subject to examination by the U.S. Internal Revenue Service (“IRS”). State income tax returns are generally subject to examination for a period of three to four years after filing the respective tax returns. The tax years 2019 through 2023 remain open to examination by the various foreign taxing jurisdictions to which the Company is subject.

The following presents the changes in the balance of our deferred income tax asset valuation allowance:

Year EndedItemBalance at beginning of yearAdditions (reductions) charged to expense
Other(1)
Balance at end of year
2024Deferred income tax asset valuation allowance$125,533 $43,365 $(599)$168,299 
2023Deferred income tax asset valuation allowance$100,694 $23,606 $1,233 $125,533 
2022Deferred income tax asset valuation allowance$91,165 $12,848 $(3,319)$100,694 
(1) The Other portion of changes to our valuation allowance consists primarily of the impact of acquisitions and changes in foreign currency translation rates.