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INCOME TAXES

12 Months Ended

Dec. 27, 2025

J.INCOME TAXES

Income tax provisions for the years ended December 27, 2025, December 28, 2024, and December 30, 2023 are summarized as follows (in thousands):


		2025		2024		2023
Currently Payable:
Federal		$	27,236	$	101,832	$	123,257
State and local			9,057		21,751		28,580
Foreign			10,757		12,877		10,808
			47,050		136,460		162,645
Net Deferred:
Federal			43,320		(10,951)		(2,249)
State and local			8,468		(2,074)		(3,223)
Foreign			(2,589)		(2,013)		(389)
			49,199		(15,038)		(5,861)
Total income tax expense		$	96,249	$	121,422	$	156,784

The components of earnings before income taxes consist of the following:


		2025		2024		2023
U.S.		$	366,193	$	496,245	$	633,816
Foreign			26,048		43,910		37,425
Total		$	392,241	$	540,155	$	671,241

The effective income tax rates are different from the statutory federal income tax rates for the following reasons:


		2025				2024				2023
		Amount	Percent			Amount	Percent			Amount	Percent
U.S. federal statutory tax rate	$	82,370	21.0	%	$	113,433	21.0	%	$	140,961	21.0	%
State and local incomes taxes, net of federal income tax effects		13,845	3.5			15,545	2.9			20,032	3.0
Foreign tax effects		1,692	0.4			1,618	0.3			1,361	0.2
Effect of cross-border tax laws		(190)	—			572	0.1			193	—
Tax credits		(3,128)	(0.8)			(5,386)	(1.0)			(5,873)	(0.9)
Valuation allowances		391	0.1			(547)	(0.1)			1,336	0.2
Nontaxable or nondeductible items:
Share-based payment awards		(8,969)	(2.3)			(13,452)	(2.5)			(5,533)	(0.8)
162(m) - nondeductible officer compensation		7,009	1.8			8,319	1.5			4,140	0.6
Other		1,924	0.5			(255)	—			(1,861)	(0.3)
Changes in unrecognized tax benefits		572	0.1			878	0.2			1,560	0.2
Other adjustments		733	0.2			697	0.1			468	0.2
Effective income tax rate	$	96,249	24.5	%	$	121,422	22.5	%	$	156,784	23.4	%

We assessed foreign tax effects on an individual jurisdiction basis, as required by ASU 2023-09. No foreign jurisdiction, either individually or in aggregate, exceeded the threshold for separate disclosure. As a result, foreign tax effects are presented as a single aggregated reconciling item in the effective tax rate reconciliation.

The following states make up the majority of our state and local income tax expense:


	2025
Florida	$	1,952
Georgia		1,636
Pennsylvania		1,321
Texas		1,318
California		1,266
Total	$	7,493
All other states		6,352
State and local incomes taxes, net of federal income tax effects	$	13,845

Temporary differences which give rise to deferred income tax assets and (liabilities) on December 27, 2025 and December 28, 2024 are as follows (in thousands):


		2025			2024
Employee benefits		$	52,057		$	49,666
Lease liability			32,033			31,100
Net operating loss carryforwards			9,903			6,550
Foreign subsidiary capital loss carryforward			510			428
Other tax credits			434			—
Inventory			2,444			3,047
Reserves on receivables			2,305			2,025
Accrued expenses			3,752			3,762
Capitalized research and development costs			201			35,548
Other, net			276			—
Gross deferred income tax assets			103,915			132,126
Valuation allowance			(4,101)			(3,428)
Deferred income tax assets			99,814			128,698
Depreciation			(103,982)			(84,924)
Intangibles			(40,614)			(39,525)
Right of use assets			(30,398)			(29,894)
Other, net			—			(336)
Deferred income tax liabilities			(174,994)			(154,679)
Net deferred income tax liability		$	(75,180)		$	(25,981)

Income taxes paid (net of refunds received) during the year ended December 27, 2025 and December 28, 2024 were as follows (in thousands):


	2025		2024
Federal	$	47,000	$	97,000
State and local		12,633		25,737
Foreign		8,133		12,514
Total	$	67,766	$	135,251

All state, local, and foreign jurisdictions individually represented less than 5% of total income taxes paid, net of refunds, and are included in the aggregated amounts above.

As of December 27, 2025, we had federal, state and foreign net operating loss (NOL) carryforwards of $9.9 million. The NOL carryforwards expire as follows:


	Net Operating Losses
	U.S.		State		Foreign
2026 - 2030	$	—	$	—	$	218
2031 - 2035		—		502		7,166
2036 - 2040		—		499		—
2041 - 2045		—		932		—
Thereafter		—		—		585
Total	$	—	$	1,933	$	7,969

As of December 27, 2025, we believe that it is more likely than not that the benefit from certain state and foreign NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $3.6 million against the various NOLs. Furthermore, there is a valuation allowance of $0.5 million against a capital loss carryforward we have for a wholly-owned subsidiary, UFP Canada, Inc. Based upon the business activity and the nature of the assets of this subsidiary, our ability to realize a future benefit from this carryforward is doubtful. The capital loss has an unlimited carryforward and therefore will not expire unless there is a change in control of the subsidiary.

The Organization of Economic Cooperation and Development (“OECD”) reached an agreement among various countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. We continue to analyze the impacts of these legislative changes to our effective tax rate, consolidated financial statements, and related disclosures. As of December 27, 2025, we do not expect the impact of Pillar Two legislation to have a material impact on our tax expense.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are continuing to evaluate the impact of OBBBA beyond 2025; however, any effects are expected to relate primarily to deferred tax items and are not anticipated to materially impact our effective tax rate.