Income Taxes

9 Months Ended

Sep. 28, 2021

Income Taxes

Income Taxes

(5) Income Taxes

Our effective tax rate was 11.6% and 13.5% for the 13 and 39 weeks ended September 28, 2021, respectively. For these periods we recognized income tax expense using an estimated effective annual tax rate. Our effective tax rate for the 13 weeks ended September 29, 2020 was 9.2%. For the 39 weeks ended September 29, 2020, due to the impact of tax credits on near break-even pre-tax income, the effective tax rate was not meaningful. For these periods we recognized an income tax benefit using a discrete tax calculation as we were unable to reliably estimate our full year effective income tax rate. This was primarily due to the inability to estimate the increased impact of the FICA tip and Work opportunity tax credits on our effective tax rate as a result of the significant decrease in our pre-tax income. The impact of these credits was the primary driver of the difference between our statutory and effective tax rates for all periods presented. Additionally, the FICA tip and Work opportunity tax credits exceeded our federal tax liability for fiscal year 2020 but we expect to fully utilize these credits in our 2021 tax year.