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Income Taxes
 12 Months Ended
May 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes for continuing operations consists of the following components for the fiscal years ended May 31:
(In thousands)202220212020
U.S. operations$1,445,719 $1,221,690 $1,035,902 
Foreign operations53,049 66,059 22,389 
$1,498,768 $1,287,749 $1,058,291 
Income tax expense (benefit) for continuing operations consists of the following components for the fiscal years ended May 31:
(In thousands)202220212020
Current:   
Federal$162,269 $164,104 $153,736 
State and local32,431 42,340 34,502 
Foreign16,676 12,417 6,985 
211,376 218,861 195,223 
Deferred51,635 (42,080)(13,292)
$263,011 $176,781 $181,931 

Reconciliation of income tax expense for continuing operations using the statutory rate and actual income tax expense is as follows for the fiscal years ended May 31:
(In thousands)202220212020
Income taxes at the U.S. federal statutory rate$314,741 $270,427 $222,258 
Permanent differences (1)
(85,413)(101,870)(67,075)
State and local income taxes, net of federal benefit33,547 27,304 25,294 
Capital loss carryback— (14,072)— 
Other136 (5,008)1,454 
$263,011 $176,781 $181,931 
(1)    Primarily consists of the excess tax benefits related to stock-based compensation.
The components of deferred income taxes included on the consolidated balance sheets are as follows at May 31:
(In thousands)20222021
Deferred tax assets:  
Reserves related to accounts receivable$10,928 $10,292 
Inventory obsolescence28,020 30,617 
Insurance reserves45,237 45,802 
Stock-based compensation62,522 74,898 
Operating lease liabilities43,745 44,530 
Deferred compensation and other92,250 114,553 
282,702 320,692 
Valuation allowance— (2,037)
282,702 318,655 
Deferred tax liabilities:  
Uniform and other rental items in service226,510 202,846 
Property and equipment171,819 167,622 
Service contracts and other intangible assets199,256 207,834 
Treasury locks31,566 — 
Capitalized contract costs81,314 79,356 
Operating lease right-of-use assets43,745 44,530 
State taxes and other2,269 3,114 
756,479 705,302 
Net deferred tax liability$473,777 $386,647 
Although realization is not assured, management has evaluated its deferred tax assets to determine whether a valuation allowance is required or should be adjusted. This evaluation considers, among other items, the nature, frequency and amount of recent losses, reversal periods of taxable temporary differences, duration of statutory periods and tax planning strategies. As a result of this analysis, management believes it is more likely than not that the recorded deferred tax assets, net of valuation allowances, will be realized.

The progression of the valuation allowance is as follows at May 31:
(In thousands)20222021
Balance at beginning of year$(2,037)$(6,411)
Subtractions2,037 4,374 
Balance at end of year$— $(2,037)
Income taxes paid were $208.5 million, $245.5 million and $160.3 million for the fiscal years ended May 31, 2022, 2021 and 2020, respectively.

As of May 31, 2022 and 2021, there was $30.8 million and $34.2 million, respectively, in total unrecognized tax benefits, which, if recognized, would favorably impact Cintas' effective tax rate. Cintas recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense in the consolidated statements of income, which is consistent with the recognition of these items in prior reporting periods. The total amount accrued for interest and penalties as of May 31, 2022 and 2021, was $4.0 million and $4.2 million, respectively. Cintas records this tax liability in long-term accrued liabilities on the consolidated balance sheets.
A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits (exclusive of interest and penalties) is as follows:
(In thousands) 
Balance at June 1, 2020$44,670 
Additions for tax positions of the current year4,728 
Additions for tax positions of prior years2,726 
Settlements(5,593)
Statute expirations(4,074)
Balance at May 31, 202142,457 
Additions for tax positions of the current year5,558 
Additions for tax positions of prior years3,093 
Settlements(7,352)
Statute expirations(6,182)
Balance at May 31, 2022$37,574 

The majority of Cintas' operations are in North America. Cintas is required to file U.S. federal income tax returns, as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax expense, either of which could have an impact on the consolidated results of operation in any given period.

All U.S. federal income tax returns are closed to audit through fiscal 2018. Cintas is currently in various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to 2014. Based on the status and resolution of the various audits and other potential regulatory developments, it is expected that the balance of unrecognized tax benefits will not materially change for the fiscal year ending May 31, 2023.

Foreign Withholding Tax
The Company asserts that all foreign earnings will be indefinitely reinvested, with the exception of certain foreign investments in which earnings and cash generation are in excess of local needs. With the passage of the Tax Cuts and Jobs Act in the U.S., dividends of earnings from non-U.S. operations are generally no longer subject to U.S. income tax. Cintas continues to analyze the estimated impact of the non-U.S. income and withholding tax liabilities based on the source of these earnings, as well as the expected means through which those earnings may be taxed; however, the unrecorded tax is not material to the consolidated financial statements.