Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 7. Income Taxes

Earnings before income taxes were derived from the following sources:

	2021		2020	2019
Domestic	$	1,100.3	1,046.7	977.6
Foreign	107.5		86.0	66.1
Earnings before income taxes	$	1,207.8	1,132.7	1,043.7

Components of income tax expense (benefit) were as follows:

2021:	Current		Deferred	Total
Federal	$	214.3	(11.4)	202.9
State	46.7		(1.7)	45.0
Foreign	34.1		0.8	34.9
Income tax expense	$	295.1	(12.3)	282.8

2020:	Current		Deferred	Total
Federal	$	195.4	1.8	197.2
State	47.5		(0.5)	47.0
Foreign	28.1		1.3	29.4
Income tax expense	$	271.0	2.6	273.6

2019:	Current		Deferred	Total
Federal	$	177.4	11.3	188.7
State	41.6		0.2	41.8
Foreign	22.1		0.2	22.3
Income tax expense	$	241.1	11.7	252.8

Income tax expense in the accompanying consolidated financial statements differed from the expected expense as follows:

	2021			2020		2019
U.S. federal statutory income tax rate	21.0		%	21.0	%	21.0	%
U.S. federal income tax expense at statutory rate	$	253.6		237.9		219.2
Increase (decrease) attributed to:
State income taxes, net of federal benefit	34.9			36.3		32.8
Other, net	(5.7)			(0.6)		0.8
Total income tax expense	$	282.8		273.6		252.8
Effective income tax rate	23.4		%	24.2	%	24.2	%

The tax effects of temporary differences that give rise to deferred income tax assets and liabilities at year end consisted of the following: 

	2021		2020
Deferred income tax assets (liabilities):
Inventory costing and valuation methods	$	5.2	5.3
Allowance for credit losses	3.1		3.1
Insurance reserves	7.4		9.1
Customer promotions	2.3		2.4
Stock-based compensation	2.8		3.3
Operating lease liabilities	62.6		62.1
Federal and state benefit of uncertain tax positions	0.9		0.8
Foreign net operating loss and credit carryforwards	1.4		1.9
Foreign valuation allowances	(1.7)		(2.2)
Prepaid royalty	5.9		—
Other, net	0.2		(0.3)
Total deferred income tax assets	90.1		85.5
Property and equipment	(110.0)		(117.6)
Operating lease ROU assets	(61.3)		(61.4)
Total deferred income tax liabilities	(171.3)		(179.0)
Deferred income tax liabilities	$	(81.2)	(93.5)

A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits was as follows:

	2021		2020
Balance at beginning of year:	$	8.8	8.6
Increase related to prior year tax positions	0.3		0.2
Decrease related to prior year tax positions	—		(0.1)
Increase related to current year tax positions	0.9		0.8
Decrease related to statute of limitation lapses	(2.6)		(0.7)
Balance at end of year:	$	7.4	8.8

Included in the liability for gross unrecognized tax benefits is an immaterial amount for interest and penalties, both of which we classify as a component of income tax expense. The amount of gross unrecognized tax benefits that would favorably impact the effective tax rate, if recognized, is not material. We do not anticipate significant changes in total unrecognized tax benefits during the next twelve months. The 2021 and 2020 liability is included in deferred income taxes in the Consolidated Balance Sheets.

We file income tax returns in the United States federal jurisdiction, all states, and various local and foreign jurisdictions. We are no longer subject to income tax examinations by taxing authorities for taxable years before 2018 in the case of United States federal examinations, and with limited exception, before 2016 in the case of foreign, state, and local examinations. During 2021, there were no material changes in unrecognized tax benefits.

In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or very minimal. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our approximately $436.3 of undistributed earnings from foreign subsidiaries to the U.S. as those earnings continue to be permanently reinvested.