Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income tax expense were as follows (in thousands):

	Year Ended December 31,
	2022		2023		2024
Current income tax expense:
Federal	$	4,293	$	2,384	$	3,141
State	2,086		2,430		2,688
	6,379		4,814		5,829
Deferred income tax (benefit) expense:
Federal	(36,395)		(12,713)		3,722
State	(6,260)		(2,816)		868
	(42,655)		(15,529)		4,590
Income tax (benefit) expense	$	(36,276)	$	(10,715)	$	10,419

The tax effects of principal temporary differences are as follows (in thousands):

	As of December 31,
	2023		2024
Deferred tax assets
Goodwill and intangibles	$	47,147	$	41,872
Operating lease liability	27,370		26,638
Allowance for doubtful accounts	3,046		3,737
Interest expenses	1,108		—
Restricted stock	1,445		1,801
Accrued vacation and severance	418		475
Investment	2,071		4,098
Other	683		909
Stock option compensation expense	305		38
Deferred revenue	36		—
Total gross deferred tax assets	83,629		79,568
Valuation allowance	(2,160)		(4,409)
Total net deferred tax assets	81,469		75,159
Deferred tax liabilities
Income tax deductible capitalized software development costs	(745)		(534)
Operating lease asset	(24,931)		(23,668)
Property and equipment	(3,722)		(3,597)
Prepaid expenses	(167)		(49)
Other comprehensive income - unrealized gain on interest rate cap	(544)		—
Total deferred tax liabilities	(30,109)		(27,848)
Deferred tax assets, net	$	51,360	$	47,311

At December 31, 2024, the Company had apportioned state net operating loss carryforwards of $6.4 million and federal capital loss carryforwards of $12.8 million, respectively, which are available to offset future taxable income. At December 31, 2023, the Company had apportioned state net operating loss carryforwards of $4.4 million and federal capital loss carryforwards of $7.9 million, respectively, which are available to offset future taxable income. The federal capital loss carryforwards will begin to expire in 2026 while the state net operating loss carryforwards will begin to expire in various years from 2038 through 2044. The amount of state net operating losses that can be carried forward indefinitely is $4.7 million. The

Company’s utilization of net operating loss carryforwards may be subject to annual limitations due to ownership change provisions of Section 382 of Internal Revenue Code of 1986, as amended.

Income tax (benefit) expense differs from the amount of tax determined by applying the United States Federal income tax rates to pretax income and loss due to the application of state apportionment laws, permanent tax differences, and other temporary differences (in thousands):

	Year Ended December 31,
	2022				2023				2024
	Amount		%		Amount		%		Amount		%
Tax expense at statutory rate	$	(31,778)	21.00	%	$	(12,180)	21.00	%	$	5,572	21.00	%
State taxes, net	(4,163)		2.75	%	(1,084)		1.87	%	2,205		8.31	%
Permanent differences	318		(0.21)	%	270		(0.47)	%	502		1.89	%
Loss on equity investment	—		—	%	—		—	%	(812)		(3.06)	%
Equity-based compensation benefits	479		(0.32)	%	837		(1.44)	%	194		0.73	%
Gain on acquisition	(947)		0.63	%	—		—	%	—		—	%
Valuation allowance	(197)		0.13	%	1,614		(2.78)	%	2,249		8.48	%
Other	12		(0.01)	%	(172)		0.29	%	509		1.92	%
	$	(36,276)	23.97	%	$	(10,715)	18.47	%	$	10,419	39.27	%

Permanent differences in the table above are mainly attributable to executive and stock compensation, and nondeductible meals and entertainment expenses.

There were no material uncertain tax positions as of December 31, 2022, 2023, or 2024. Interest and penalties associated with uncertain income tax positions would be classified as income tax expense. The Company has not recorded any material interest or penalties during any of the years presented.

The Company is subject to U.S. federal income taxes as well as income tax of multiple state jurisdictions. For U.S. federal and state tax purposes, tax years 2021-2023 remain open to examination.