INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The provision for income taxes for the years ended December 31, 2024, 2023, and 2022 is summarized as follows:

	December 31,
	2024		2023		2022
Current
Federal	$	66,292	$	38,242	$	37,044
State	30,729		16,116		15,932
Total current provision	$	97,021	$	54,358	$	52,976
Deferred
Federal	$	(34,582)	$	(6,641)	$	3,345
State	(16,229)		(3,282)		228
Total deferred provision	$	(50,811)	$	(9,923)	$	3,573
Total income tax provision	$	46,210	$	44,435	$	56,549

A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2024, 2023 and 2022, respectively, is as follows:

	December 31,
	2024		2023		2022
Income tax expense at statutory rate	21.0	%	21.0	%	21.0	%
State income taxes – net of federal benefit	7.0		6.5		6.3
Non-deductible expenses	18.5		0.9		0.4
Change in valuation allowance	(0.6)		1.3		—
Change to deferred taxes	1.0		(1.6)		—
Other Adjustments	(1.4)		—		(0.4)
Total effective tax rate	45.5	%	28.1	%	27.3	%

The Company’s effective tax rate was 45.5% for the year ended December 31, 2024, compared to 28.1% for the same period in 2023 and 27.3% in 2022. The change in effective tax rate was primarily due to an increase non-deductible expenses, including non-deductible compensation in 2024.

The Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 are summarized as follows:

	December 31,
	2024		2023
Deferred tax assets (liabilities)
Accrued expenses	$	28,275	$	17,523
Allowance for doubtful accounts	21,737		8,247
Insurance	36,577		15,428
Intangible assets	4,931		4,073
Deferred compensation	2,097		1,202
Lease liability	826,397		573,227
Stock-based compensation	5,166		—
Total deferred tax assets	$	925,180	$	619,700
Valuation allowance	(991)		(2,107)
Total net deferred tax assets	$	924,189	$	617,593
Cash to accrual method change	—		(6,125)
Fixed assets	(53,106)		(36,838)
Prepaid expenses	(10,307)		(10,802)
Investment in partnership	(8,030)		(4,904)
Right of use asset	(805,552)		(555,766)
Other	(963)		(1,411)
Total deferred tax liabilities	$	(877,958)	$	(615,846)
Net deferred tax assets	$	46,231	$	1,747

As of December 31, 2024 and 2023, the Company recorded a valuation allowance of $991 and $2,107, respectively, against its captive insurance dual consolidated loss deferred tax asset. This valuation allowance was established because it was more likely than not that the deferred tax asset will not be realized.

The Company is subject to U.S. federal income tax, as well as income tax in certain states in which it operates. The Company’s federal returns for tax years 2021 and forward are subject to examination, and state returns for tax years 2020 and forward are subject to examination. The Company is not, to its knowledge, under examination by any federal or state income tax authority. The Company’s balance of net deferred tax assets is included within other assets on the combined/consolidated balance sheets as of December 31, 2024 and 2023.

As of December 31, 2024 and 2023, the Company did not have any unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company does not anticipate the uncertain tax position to change materially within the next 12 months.

The Inflation Reduction Act 2022 (IRA), which incorporates a Corporate Alternative Minimum Tax (CAMT), was signed on August 16, 2022. The changes were effective for tax years beginning after December 31, 2022. The new tax requires companies to compute two separate calculations for federal income tax purposes and pay the greater of the new minimum tax or their regular tax liability. The IRA does not have a material impact for the Company.