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Income Taxes
 12 Months Ended
Dec. 29, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes is set forth below:
Year Ended
202420232022
Domestic$254,309 $264,423 $231,862 
Foreign (a)18,104 14,995 11,643 
$272,413 $279,418 $243,505 
_______________

(a)Excludes foreign income of domestic subsidiaries.
The (provision for) benefit from income taxes is set forth below:
Year Ended
202420232022
Current:
U.S. federal$(55,875)$(50,435)$(43,141)
State(12,888)(13,730)(9,152)
Foreign(14,822)(11,620)(9,537)
Current tax provision(83,585)(75,785)(61,830)
Deferred:
U.S. federal10,786 2,163 (3,868)
State(5,409)564 (2,629)
Foreign152 (1,920)2,192 
Deferred tax benefit (provision)5,529 807 (4,305)
Income tax provision$(78,056)$(74,978)$(66,135)

Deferred tax assets (liabilities) are set forth below:
Year End
December 29, 2024December 31, 2023
Deferred tax assets:
Operating and finance lease liabilities$333,033 $339,655 
Net operating loss and credit carryforwards51,667 58,170 
Deferred revenue23,085 23,848 
Other51,626 50,935 
Valuation allowances(38,536)(39,346)
Total deferred tax assets420,875 433,262 
Deferred tax liabilities:
Operating and finance lease assets(300,498)(310,011)
Intangible assets(282,186)(290,782)
Fixed assets(61,160)(62,673)
Other(40,451)(40,149)
Total deferred tax liabilities(684,295)(703,615)
$(263,420)$(270,353)
The amounts and expiration dates of tax credit and net operating loss carryforwards are as follows:
AmountExpiration
Tax credit carryforwards:
U.S. federal foreign tax credits21,385 2027-2034
Foreign tax credits of non-U.S. subsidiaries812 Indefinite
Total$22,197 
Net operating loss carryforwards (pre-tax):
State and local net operating loss carryforwards719,694 2025-2035
State and local net operating loss carryforwards215,896 Indefinite
Foreign net operating loss carryforwards10,766 Indefinite
Total$946,356 

The Company’s valuation allowances of $38,536 and $39,346 as of December 29, 2024 and December 31, 2023, respectively, relate primarily to foreign tax credit and foreign and state net operating loss carryforwards. The relative presence of Company-operated restaurants in various states impacts expected future state taxable income available to utilize state net operating loss carryforwards.

The current portion of refundable income taxes was $3,587 and $5,284 as of December 29, 2024 and December 31, 2023, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of December 29, 2024 and December 31, 2023.

The reconciliation of income tax computed at the U.S. federal statutory rate of 21% to reported income tax is set forth below:
Year Ended
202420232022
Income tax provision at the U.S. federal statutory rate$(57,207)21.0 %$(58,678)21.0 %$(51,136)21.0 %
State income tax provision, net of U.S. federal income tax effect (a)(15,717)5.8 %(11,400)4.1 %(11,616)4.8 %
Prior years’ tax matters78 0.0 %(2,250)0.8 %2,290 (0.9)%
Excess federal tax benefits from share-based compensation113 0.0 %845 (0.3)%402 (0.2)%
Foreign and U.S. tax effects of foreign operations457 (0.2)%1,799 (0.6)%(3,744)1.6 %
Valuation allowances(3,323)1.2 %(3,533)1.3 %2,127 (0.9)%
Tax credits899 (0.3)%1,050 (0.4)%1,385 (0.6)%
Non-deductible executive compensation(2,698)1.0 %(2,863)1.0 %(3,154)1.3 %
Unrepatriated earnings(655)0.2 %(387)0.1 %(294)0.1 %
Non-deductible expenses and other(3)0.0 %439 (0.2)%(2,395)1.0 %
$(78,056)28.7 %$(74,978)26.8 %$(66,135)27.2 %
_______________

(a)The change in state effective tax rate during 2024 was driven primarily by state rate law changes.

The Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process (“CAP”). As part of CAP, tax years are examined on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. As such, our tax returns for fiscal years through 2022 have been settled. The Company or one of its subsidiaries also files tax returns in various state, local and foreign jurisdictions. The statute of limitations in these jurisdictions vary but generally income tax returns from its 2019 fiscal year and forward remain subject to examination. We believe that adequate
provisions have been made for any liabilities, including interest and penalties that may result from the completion of these examinations.

Unrecognized Tax Benefits

As of December 29, 2024, the Company had unrecognized tax benefits of $14,805, which, if resolved favorably, would reduce income tax expense by $11,696. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
Year Ended
202420232022
Beginning balance$16,719 $17,404 $18,849 
Additions:
Tax positions of current year375 836 178 
Reductions:
Tax positions of prior years (a)(2,069)(690)(662)
Settlements— (249)(8)
Lapse of statute of limitations(220)(582)(953)
Ending balance$14,805 $16,719 $17,404 
_______________

(a)Reduction in uncertain tax benefits related to tax positions of prior years during 2024 was primarily driven by a non-recurring state rate law change.

During 2025, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $1,024 due primarily to the lapse of statutes of limitations and expected settlements.

During 2024, 2023 and 2022, the Company recognized expense (income) for interest of $376, $134 and $(30), respectively. The Company has $1,355 and $979 accrued for interest related to uncertain tax positions as of December 29, 2024 and December 31, 2023, respectively.