Income Taxes

6 Months Ended

Jul. 02, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12. INCOME TAXES

We had income tax expense of $12.0 million for the three months ended July 2, 2022, compared with income tax expense of $2.7 million for the three months ended July 3, 2021. Our effective tax rate for the three months ended July 2, 2022, was an expense rate of 24.8%, and was an expense rate of 20.3% for the three months ended July 3, 2021. Our income tax expense for the three months ended July 2, 2022, and July 3, 2021, includes $237 thousand and $426 thousand, respectively, relating to our 75% share of the pre-tax earnings of Eco. We had an income tax expense of $19.8 million for the six months ended July 2, 2022, compared with income tax expense of $6.7 million for the six months ended July 3, 2021. Our effective tax rate for the six months ended July 2, 2022, was an expense rate of 24.7%, and was an expense rate of 22.1% for the six months ended July 3, 2021. Our income tax expense for the six months ended July 2, 2022, and July 3, 2021, includes $742 thousand and $731 thousand, respectively, relating to our 75% share of the pre-tax earnings of Eco.

Income tax expense in the three and six months ended July 2, 2022 includes a refund from the state of Florida, received by the Company in the second quarter of 2022, relating to excess taxes received by the state in 2021, which was $584 thousand, benefiting tax expense by $462 thousand, net of its Federal tax effect. Income tax expense in the three months ended July 2, 2022 and July 3, 2021 include discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $40 thousand in the three months ended July 2, 2022, and $605 thousand in the three months ended July 3, 2021. Income tax expense in the six months ended July 2, 2022 and July 3, 2021 include discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $96 thousand in the six months ended July 2, 2022, and $700 thousand in the six months ended July 3, 2021. Excluding discrete items of income tax, the effective tax rates for the three months ended July 2, 2022 and July 3, 2022, would have been income tax expense rates of 25.6% and 24.1%, respectively. Excluding discrete items of income tax, the effective tax rates for the six months ended July 2, 2022 and July 3, 2022, would have been income tax expense rates of 25.4% and 24.1%, respectively.

In September 2021, the state of Florida announced that the corporate income tax rate for the 2021 tax year was being lowered from its then current level of 4.458% to 3.535%. However, for 2022, Florida's corporate income tax rate returned to its statutory level before the passage of the Tax Cuts and Jobs Act, which is 5.5%. As such, we adjusted our annual effective tax rate for 2022 to include this increase in rate in Florida, where a substantial portion of our business is apportioned, to an estimated combined statutory federal and state rate of 25.7% from our estimate in 2021 of 24.2%. During the first quarters of 2022 or 2021, we were not required to make any payments of estimated federal or state income taxes. During the first half of 2022, we made payments of estimated taxes totaling $9.6 million, which included $8.8 million in Federal estimated income taxes with the remainder to various states, primarily Florida. During the first half of 2021, we made payments of estimated taxes totaling $10.9 million, which included $7.6 million in Federal estimated income taxes with the remainder to various states, primarily Florida.