INCOME TAXES

9 Months Ended

Sep. 30, 2022

INCOME TAXES

INCOME TAXES

NOTE E – INCOME TAXES

The effective tax rate was 22.7% and 23.3% for the three and nine months ended September 30, 2022, respectively, compared to 26.1% and 22.5% for the same periods of  2021. State tax rates vary among states and average approximately 6.0% to 6.5%, although some state rates are higher and a small number of states do not impose an income tax.

For the three and nine months ended September 30, 2022 and 2021, the difference between the Company’s effective tax rate and the federal statutory rate primarily resulted from state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance, federal research and development tax credits, changes in tax valuation allowances, and tax benefit from the vesting of stock awards. The Company’s effective tax rate for the three and nine months ended September 30, 2022 was also impacted by the reinstatement of the federal alternative fuel tax credit.

As of September 30, 2022, the Company’s deferred tax liabilities, which will reverse in future years, exceeded the deferred tax assets. The Company evaluated the total deferred tax assets at September 30, 2022 and concluded that, other than for certain deferred tax assets related to foreign and state tax credit carryforwards and state net operating losses, the assets did not exceed the amount for which realization is more likely than not. In making this determination, the Company considered the future reversal of existing taxable temporary differences, future taxable income, and tax planning strategies. Valuation allowances for deferred tax assets totaled $2.4 million and $2.2 million at September 30, 2022 and December 31, 2021, respectively.

The Company paid federal, state, and foreign income taxes of $87.5 million and $43.0 million during the nine months ended September 30, 2022 and 2021, respectively. The Company received refunds of federal and state income taxes that were paid in prior years of $1.2 million and less than $0.1 million during the nine months ended September 30, 2022 and 2021, respectively.