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Income Taxes
 6 Months Ended
Jul. 01, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

I. Income Taxes

 

The following table provides a summary of the income tax provision for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022:

 

 

 

Thirteen weeks ended

 

Twenty-six weeks ended

 

 

July 1,
2023

 

June 25,
2022

 

July 1,
2023

 

June 25,
2022

Effective tax rate

 

27.5%

 

24.7%

 

27.5%

 

25.1%

 

The increase in the tax rate for the thirteen weeks ended July 1, 2023 as compared to the thirteen weeks ended June 25, 2022 is primarily due to an increase in permanent non-deductible items. The increase in the tax rate for the twenty-six weeks ended July 1, 2023 as compared to the twenty-six weeks ended June 25, 2022 is primarily due to a decrease in the tax benefit of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, as well as an increase to permanent, non-deductible items.

 

As of both July 1, 2023 and December 31, 2022, the Company had approximately $0.2 million of unrecognized income tax benefits.

 

The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. As of both July 1, 2023 and December 31, 2022, the Company had approximately $0.2 million accrued for interest and penalties recorded in other liabilities.

 

The Internal Revenue Service completed an examination of the 2015 consolidated corporate income tax return and issued a no change report in 2018. The Company’s state income tax returns remain subject to examination for three or four years depending on the state’s statute of limitations. The Company is being audited by one state for income tax purposes as of July 1, 2023.