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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 12 — Income Taxes The Company’s income tax expense (benefit) consisted of the following:
|  | Year Ended December 31,
(in thousands) |  | 2023 |  | 2022 |  | 2021
Current tax provision |  |  |  |  |  |
Federal |  | $ | 193 |  |  | $ | 181 |  |  | $ | 170 |
State |  | 844 |  |  | 1,340 |  |  | 865 |
Total current tax provision |  | 1,037 |  |  | 1,521 |  |  | 1,035 |
Deferred tax expense (benefit) |  |  |  |  |  |
Federal |  | 1,605 |  |  | (6,081) |  |  | (2,265) |
State |  | 4,325 |  |  | 7,159 |  |  | (398) |
Total deferred tax provision |  | 5,930 |  |  | 1,078 |  |  | (2,663) |
Income tax expense (benefit) |  | $ | 6,967 |  |  | $ | 2,599 |  |  | $ | (1,628) |
The Company’s effective income tax rate differs from the U.S. federal statutory income tax rate as itemized below:
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
U.S. federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Income allocable to non-controlling interests not subject to tax |  | 6.3 | % |  | (32.9) | % |  | (18.4) | %
State and local income taxes, net of federal benefit |  | 10.1 | % |  | (9.5) | % |  | (0.8) | %
State rate adjustment |  | 17.5 | % |  | (39.1) | % |  | — | %
Net impact of GAAP basis shifts |  | — | % |  | — | % |  | (0.2) | %
Non-deductible compensation |  | 0.7 | % |  | (2.0) | % |  | (0.2) | %
Tax credits |  | (12.9) | % |  | 10.1 | % |  | 0.3 | %
TRA adjustments |  | 0.2 | % |  | 4.4 | % |  | — | %
Return-to-provision adjustments |  | (5.4) | % |  | 32.4 | % |  | — | %
Stock-based compensation |  | 3.8 | % |  | — | % |  | — | %
Other |  | 0.4 | % |  | — | % |  | — | %
Valuation allowance |  | (0.5) | % |  | — | % |  | (0.3) | %
Effective income tax rate |  | 41.2 | % |  | (15.6) | % |  | 1.4 | %
The components of the Company’s deferred tax assets are as follows:
(in thousands) |  | December 31, 2023 |  | December 31, 2022
Deferred tax assets |  |  |  |
Investment in Dutch Bros OpCo |  | $ | 346,172 |  |  | $ | 255,763 |
Net operating loss carryforwards |  | 34,988 |  |  | 19,356 |
Interest expense |  | 14,187 |  |  | 7,781 |
Credit carryforwards |  | 4,991 |  |  | 2,813 |
Charitable contribution carryforward |  | 1,546 |  |  | 1,498 |
Other |  | 2,130 |  |  | 2,661 |
Total deferred tax assets |  | 404,014 |  |  | 289,872 |
Less: valuation allowance |  | (1,019) |  |  | (1,107) |
Net deferred tax assets |  | $ | 402,995 |  |  | $ | 288,765 |
The Company recognizes deferred tax assets to the extent, based on available evidence, that it is more likely than not that they will be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent results of operations. For the year ended December 31, 2023, the Company recorded a valuation allowance on its deferred tax assets, primarily related to the Company’s charitable contributions, of which it does not expect to recognize the benefit from in the foreseeable future. The Company has no deferred tax liabilities. As of December 31, 2023, the Company had U.S. federal net operating losses of $142.8 million and tax credit carryforwards of approximately $5.0 million. The Company’s federal net operating losses do not expire and tax credits will begin to expire in 2038 if not utilized. As of December 31, 2023, the Company had $95.0 million of state tax net operating losses and no state tax credits. Of the state tax net operating losses, $90.0 million will begin to expire in 2033 if not utilized and the remaining $5.0 million do not expire. Utilization of net operating losses, credit carryforwards, and certain deductions may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The tax benefits related to future utilization of federal and state net operating losses, tax credit carryforwards, and other deferred tax assets may be limited or lost if cumulative changes in ownership exceeds 50% within any three-year period. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examinations from various taxing authorities. There were no interest and penalties accrued for the three years ended December 31, 2023. The Company has assessed its tax positions taken and concluded there are no significant uncertain tax positions. The Company has no unrecognized tax benefits as of December 31, 2023 or 2022, that, if recognized, would affect the amount of income tax expense reported. The Company files returns with the Internal Revenue Service and multiple state jurisdictions, which are subject to examination by the taxing authorities for years 2018 and later. The earlier tax years are subject to examination due to the utilization of net operating losses in recent tax years. None of our federal or state income tax returns are currently under examination by federal or state taxing authorities.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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