XML 36 R30.htm IDEA: XBRL DOCUMENT v3.25.3
Income Taxes
 9 Months Ended
Oct. 04, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

20. INCOME TAXES

The company’s effective tax rate for the twelve weeks ended October 4, 2025 was 24.2% compared to 24.0% for the twelve weeks ended October 5, 2024. The increase in the rate was primarily due to year-over-year differences in state income taxes recorded discretely. During the twelve weeks ended October 4, 2025 and October 5, 2024, the primary differences in the effective rate and the statutory rate were state income taxes.

The company's effective tax rate for the forty weeks ended October 4, 2025 was 25.2% compared to 24.6% for the forty weeks ended October 5, 2024. The increase in the rate was primarily due to a larger net discrete tax expense in the current year when compared to a net discrete tax benefit for the prior year. For the periods presented, the discrete items in the effective rate relate to state income taxes, shortfalls in the current year period and windfalls in the prior year period on the vesting of stock-based compensation awards, and benefits recognized from tax credits. During the forty weeks ended October 4, 2025 and October 5, 2024, the primary differences in the effective rate and the statutory rate were state income taxes.

During the second quarter of 2025, new tax legislation was enacted under the One Big Beautiful Bill Act (the “Act”). The Act includes a wide range of tax provisions that could impact the company’s financial results in 2025 and future periods. Significant impacts stemming from the Act include 2025 and future expensing of U.S. based research and development expenditures under Internal Revenue Code Section 174, coupled with the option to deduct previously capitalized research and development expenditures. The Act also reestablished elective 100% initial-year bonus depreciation. The company has undergone efforts to reasonably estimate the impact of the Act to our financial statements. As such, the company has recorded an estimate of $30 million of deferred tax activity through the forty weeks ended October 4, 2025 related to the Act. This amount will be revised to reflect additional year-to-date activity and revisions to estimates as the year progresses. The company continues to await and assess guidance from the U.S. Department of the Treasury and will continue to evaluate the full impact of the Act.

During the forty weeks ended October 4, 2025, the company’s activity with respect to its uncertain tax positions and related interest expense accrual was not significant to the Condensed Consolidated Financial Statements. As of October 4, 2025, we do not anticipate significant changes to the amount of gross unrecognized tax benefits over the next twelve months.