Income Taxes

12 Months Ended

Dec. 30, 2023

Income Taxes

Income Taxes

Note 9    Income Taxes

(amounts in thousands)	2023		2022		2021
Current:
Federal	$	28,392	$	28,536	$	20,771
State		9,521		7,896		6,374
Deferred:
Federal		955		3,191		8,074
State		4,000		(4,042)		4,239
Total	$	42,868	$	35,581	$	39,458

The reconciliation of income taxes has been computed at the federal statutory rate of 21% in 2023, 2022 and 2021. Ending deferred tax liability has been computed at the federal statutory rate of 21%.

(amounts in thousands)	2023		2022		2021
Income taxes at federal statutory rate	$	30,806	$	33,763	$	31,144
State income taxes, net of federal income tax benefit		9,800		4,700		6,207
Nondeductible employee-related expenses		2,709		2,235		2,530
State deferred rate change		—		(5,462)		-
Other		(448)		345		(423)
Provision for income taxes	$	42,868	$	35,581	$	39,458

The effective income tax rate was 29.2%, 22.1% and 26.6% in 2023, 2022, and 2021, respectively. The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes as well as nondeductible employee-related expenses. The Company reduced its provision for income taxes by $5.5 million in 2022 primarily due to the effects of Pennsylvania House Bill 1342 which was enacted on July 8, 2022. The bill made significant changes to the Commonwealth’s corporate income tax laws which included lowering the tax rate gradually from 9.99% in 2022 to 4.99% in 2031.

Cash paid for federal income taxes was $23.0 million, $29.4 million and $20.4 million in 2023, 2022 and 2021 respectively. Cash paid for state income taxes was $20.8 million, $8.0 million and $4.4 million in 2023, 2022 and 2021 respectively.

Note 9    Income Taxes (continued)

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 30, 2023 and December 31, 2022, are:

(amounts in thousands)	2023		2022
Deferred tax assets:
Accounts receivable	$	540	$	1,195
Employment incentives		4,855		6,329
Self-insurance liability		9,155		8,717
Postretirement benefit obligations		6,565		5,963
Net operating loss and credit carryforwards		2,153		5,009
Unrecognized tax benefits		1,341		2,869
174 R&D Capitalization		2,307		426
Other		683		675
Total deferred tax assets		27,599		31,183
Deferred tax liabilities:
Inventories		(12,225)		(13,398)
Unrealized gains on marketable securities		(554)		1,280
Prepaids		(6,290)		(5,570)
Depreciation		(126,621)		(124,720)
Total deferred tax liabilities		(145,690)		(142,408)
Net deferred tax liability	$	(118,091)	$	(111,225)

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

(amounts in thousands)	2023		2022
Unrecognized tax benefits at beginning of year	$	13,661	$	10,036
Increases based on tax positions related to the current year		—		2,376
Additions for tax positions of prior year		—		1,249
Reductions for tax positions of prior years		(948)		—
Settlements		(6,329)		—
Expiration of the statute of limitations for assessment of taxes		—		—
Unrecognized tax benefits at end of year	$	6,384	$	13,661

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $0 in 2023, $3.6 million in 2022 and $1.7 million in 2021.

The Company or one of its subsidiaries files tax returns in the United States and various state jurisdictions. The tax years subject to examination in the United States and in Pennsylvania, where the majority of the Company’s revenues are generated, are 2018 to 2023.

The Company has net operating loss carryforwards of $14 million available for state income tax purposes. The net operating losses will begin to expire starting in 2027. The Company expects to fully utilize these net operating loss carryforwards.