Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the three months ended June 30, 2023 and 2022, the Company's income tax expense was $3,323,000 and $1,746,000, with effective tax rate of 23.7% and 19.5%, respectively. For the six months ended June 30, 2023 and 2022, the Company's income tax expense was $6,141,000 and $4,423,000, with effective tax rate of 23.6% and 22.6%, respectively. For both the three and six months ended June 30, 2023 and 2022, the Company's effective tax rate differed from the United States federal statutory rate of 21% primarily due to state taxes.

In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. Based upon the level of historical taxable income, at this time, the Company determined that sufficient positive evidence existed to conclude that it is more likely than not there will be full utilization of the deferred tax assets in each jurisdiction. As such, as of June 30, 2023, based on the available evidence, the Company did not record any valuation allowance.

The Company remains subject to IRS examination for the 2017 through 2022 tax years, and has received notice in February 2019 that it is under examination for years 2016 and 2017. Additionally, the Company files multiple state and local income tax returns and remains subject to examination in various of these jurisdictions for the 2018 through 2021 tax years. As of June 30, 2023, and December 31, 2022, the Company did not have any unrecognized tax benefit.

In August 2022, the Inflation Reduction Act of 2022 (the "Act") was signed into law. The Act, among other things, imposes a nondeductible 1% excise tax on the fair market value of certain stock that is "repurchased" during the taxable year by publicly traded U.S. corporations or acquired by certain of its subsidiaries. The taxable amount is reduced by the fair market value of certain issuances of stock throughout the year. The Act also imposes a 15% corporate minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after December 31, 2022. We do not expect these tax law changes to have a material impact on our condensed consolidated financial statements; however, we will continue to evaluate their impact.

In March 2023, the Internal Revenue Service ("IRS") announced that taxpayers in California affected by severe winter storms, flooding, landslides, and mudslides have until October 16, 2023, to file various individual and business tax returns and make tax payments. The Company has taken advantage of this tax relief in the current year.