Income Taxes

9 Months Ended

Feb. 25, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective income tax rate for continuing operations for the quarter ended February 25, 2024 was 10.7 percent compared to an effective income tax rate for the quarter ended February 26, 2023 of 13.2 percent. This decrease in tax rate was primarily driven by mark-to-market activity and deductions related to Ruth’s Chris transaction costs. The effective income tax rate for continuing operations for the nine months ended February 25, 2024 was 11.6 percent compared to an effective income tax rate for the nine months ended February 26, 2023 of 13.0 percent. This change was primarily driven by the impact of federal tax credits and higher benefits related to option exercises.

Included in our remaining balance of unrecognized tax benefits is $8.3 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions.

The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1 percent excise tax on share repurchases that occur after December 31, 2022 and introduced a 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income. The impact of the IRA excise tax and CAMT are immaterial to our consolidated financial statements for the quarter and nine months ended February 25, 2024.