Income Taxes

12 Months Ended

Dec. 28, 2024

Income Taxes

Income Taxes

Note 10    Income Taxes

(amounts in thousands)	2024		2023		2022
Current:
Federal	$	33,979	$	28,392	$	28,536
State		11,699		9,521		7,896
Deferred:
Federal		(5,939)		955		3,191
State		595		4,000		(4,042)
Total	$	40,334	$	42,868	$	35,581

The reconciliation of income taxes has been computed at the federal statutory rate of 21% in 2024, 2023 and 2022. Ending deferred tax liability has been computed at the federal statutory rate of 21%.

(amounts in thousands)	2024		2023		2022
Income taxes at federal statutory rate	$	31,558	$	30,806	$	33,763
State income taxes, net of federal income tax benefit		8,900		9,800		4,700
Nondeductible employee-related expenses		2,137		2,709		2,235
State deferred rate change		—		—		(5,462)
Tax Credits		(1,450)		—		—
Other		(810)		(448)		345
Provision for income taxes	$	40,334	$	42,868	$	35,581

The effective income tax rate was 26.8%, 29.2% and 22.1% in 2024, 2023, and 2022, respectively. The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes, federal and state tax credits, and 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, offset by taxable income changes, inclusive of, updating market sourcing rules, and codifying the economic nexus standard.

Cash paid for federal income taxes was $34.4 million, $23.0 million and $29.4 million in 2024, 2023 and 2022 respectively. Cash paid for state income taxes was $8.7 million, $20.8 million and $8.0 million in 2024, 2023 and 2022 respectively.

Note 10    Income Taxes (continued)

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 28, 2024 and December 30, 2023, are:

(amounts in thousands)	2024		2023
Deferred tax assets:
Accounts receivable	$	794	$	540
Employment incentives		4,300		4,855
Self-insurance liability		9,283		9,155
Postretirement benefit obligations		6,454		6,565
Net operating loss and credit carryforwards		1,533		2,153
Unrecognized tax benefits		549		1,341
174 R&D Capitalization		6,411		2,307
Other		116		683
Total deferred tax assets		29,440		27,599
Deferred tax liabilities:
Inventories		(11,811)		(12,225)
Unrealized gains on marketable securities		(223)		(554)
Prepaids		(9,895)		(6,290)
Nondeductible accruals and other		382		-
Depreciation		(120,042)		(126,621)
Total deferred tax liabilities		(141,589)		(145,690)
Net deferred tax liability	$	(112,149)	$	(118,091)

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

(amounts in thousands)	2024		2023
Unrecognized tax benefits at beginning of year	$	6,384	$	13,661
Reductions for tax positions of prior years		(1,042)		(948)
Settlements		(2,726)		(6,329)
Unrecognized tax benefits at end of year	$	2,616	$	6,384

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $0 in 2024, $0 in 2023 and $3.6 million in 2022.

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 2022 to 2024.