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INCOME TAXES | 12 Months Ended
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Jun. 26, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | Income before income taxes consists of the following:
| Fiscal Years Ended
| June 26, 2024 |  | June 28, 2023 |  | June 29, 2022
Domestic | $ | 161.8 |  |  | $ | 87.8 |  |  | $ | 113.5 |
Foreign | 3.1 |  |  | 3.0 |  |  | 1.7 |
Income before income taxes | $ | 164.9 |  |  | $ | 90.8 |  |  | $ | 115.2 |
The Provision (benefit) for income taxes and effective tax rate consists of the following:
| Fiscal Years Ended
| June 26, 2024 |  | June 28, 2023 |  | June 29, 2022
Current income tax expenses: |  |  |  |  |
Federal | $ | 17.5 |  |  | $ | 12.2 |  |  | $ | 5.8 |
State | 12.3 |  |  | 6.8 |  |  | 3.7 |
Foreign | 0.4 |  |  | 0.2 |  |  | (0.3) |
Total current income tax expenses | 30.2 |  |  | 19.2 |  |  | 9.2 |
Deferred income tax (benefit) expenses: |  |  |  |  |
Federal | (18.2) |  |  | (29.5) |  |  | (15.7) |
State | (2.5) |  |  | (2.0) |  |  | 3.7 |
Foreign | 0.1 |  |  | 0.5 |  |  | 0.4 |
Total deferred income tax (benefit) expenses | (20.6) |  |  | (31.0) |  |  | (11.6) |
Provision (benefit) for income taxes | $ | 9.6 |  |  | $ | (11.8) |  |  | $ | (2.4) |
Effective tax rate | 5.8 | % |  | (13.0) | % |  | (2.1) | %
A reconciliation between the reported Provision (benefit) for income taxes and the amount computed by applying the statutory Federal income tax rate to Income before income taxes is as follows:
| Fiscal Years Ended
| June 26, 2024 |  | June 28, 2023 |  | June 29, 2022
Income tax expense at statutory rate | $ | 34.6 |  |  | $ | 19.0 |  |  | $ | 24.2 |
FICA and other tax credits | (34.2) |  |  | (34.6) |  |  | (32.9) |
State income taxes, net of Federal benefit | 7.7 |  |  | 4.7 |  |  | 6.2 |
Officers' compensation | 3.7 |  |  | 0.0 |  |  | 0.9 |
Stock based compensation tax shortfall (windfall) | (1.2) |  |  | 0.8 |  |  | (0.7) |
Other | (1.0) |  |  | (1.7) |  |  | (0.1) |
Provision (benefit) for income taxes | $ | 9.6 |  |  | $ | (11.8) |  |  | $ | (2.4) |
Our federal statutory tax rate for fiscal 2024, fiscal 2023 and fiscal 2022 was 21.0%. Deferred Tax and Allowances The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows:
| June 26, 2024 |  | June 28, 2023
Deferred income tax assets: |  |  |
Lease liabilities | $ | 472.4 |  |  | $ | 451.5 |
Gift cards | 8.3 |  |  | 9.2 |
Insurance reserves | 15.2 |  |  | 13.7 |
Stock-based compensation | 10.3 |  |  | 9.5 |
Federal credit carryover | 61.2 |  |  | 59.5 |
Depreciation and capitalized interest on property and equipment | 15.8 |  |  | — |
Net operating losses | 4.4 |  |  | 4.2 |
State credit carryover | 1.8 |  |  | 2.1 |
Restructure charges and impairments | 3.0 |  |  | 2.1 |
Other, net | 11.9 |  |  | 9.7 |
Less: Valuation allowance | (5.8) |  |  | (4.3) |
Total deferred income tax assets | 598.5 |  |  | 557.2 |
Deferred income tax liabilities: |  |  |
Lease assets | 444.0 |  |  | 421.9 |
Goodwill and other amortization | 23.0 |  |  | 23.2 |
Depreciation and capitalized interest on property and equipment | — |  |  | 0.7 |
Prepaid expenses | 16.8 |  |  | 17.3 |
Other, net | 0.8 |  |  | 0.7 |
Total deferred income tax liabilities | 484.6 |  |  | 463.8 |
Deferred income taxes, net | $ | 113.9 |  |  | $ | 93.4 |
As of June 26, 2024, we have deferred tax assets of $5.5 million reflecting the benefit of state loss carryforwards, before federal benefit and valuation allowance, which expire at various dates between 2025 and 2044. We have deferred tax assets of $61.2 million of federal and $2.3 million of state tax credits, before federal benefit and valuation allowance, which expire at various dates between 2025 and 2044. The recognized deferred tax asset, net of valuation allowance and federal benefit, for the state loss carryforwards is $2.5 million and the state tax credit carryforwards is $0.5 million. There is no valuation allowance on the federal credit carryover and $5.1 million is limited by Section 382 of the Internal Revenue Code. The valuation allowance is $5.8 million at the end of fiscal 2024 to recognize certain deductions and tax credits management believes are more-likely-than-not to not be realized. In assessing whether a deferred tax asset will be realized, we consider the likelihood of the realization, and the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income, as of June 26, 2024, we believe it is more-likely-than-not that we will realize the benefits of the deferred tax assets, net of the existing valuation allowances. Unrecognized Tax Benefits A reconciliation of unrecognized tax benefits are as follows:
| June 26, 2024 |  | June 28, 2023
Balance at beginning of year | $ | 2.8 |  |  | $ | 3.7 |
Additions based on tax positions related to the current year | 0.4 |  |  | 0.4 |
Additions (Decreases) based on tax positions related to prior years | — |  |  | 0.1 |
Expiration of statute of limitations | (0.3) |  |  | (1.4) |
Balance at end of year | $ | 2.9 |  |  | $ | 2.8 |
The total amount of unrecognized tax benefits, excluding interest and penalties, which would affect income tax expenses if resolved in our favor was $2.3 million and $2.2 million as of June 26, 2024 and June 28, 2023, respectively. We do not expect any material changes to our liability for uncertain tax positions in the next 12 months. We recognize accrued interest and penalties related to unrecognized tax benefits in Provision (benefit) for income taxes in the Consolidated Statements of Comprehensive Income. As of June 26, 2024, we had $0.2 million ($0.2 million net of a $0.0 million Federal deferred tax benefit) of interest and penalties accrued, compared to $0.2 million ($0.2 million net of a $0.0 million Federal deferred tax benefit) as of June 28, 2023. Our income tax returns are subject to examination by taxing authorities in the jurisdictions in which we operate. The periods subject to examination for our federal return are fiscal 2023 to fiscal 2025, and fiscal 2021 to fiscal 2023 for our Canadian returns. State income tax returns are generally subject to examination for a period of three to five years from date return is filed. We have various state income tax returns in the process of examination or settlements. Our federal returns for fiscal 2023 to 2024 are currently under examination through the Internal Revenue Service: Compliance Assurance Process (CAP) program. Our federal return for fiscal 2025 is under examination through the Internal Revenue Service: Bridge Plus program. There are no unrecorded liabilities associated with these examinations.

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