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Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of the Company's income tax expense are as follows:
| Year Ended September 30,
| 2024 |  | 2023 |  | 2022
| (In millions)
Current tax expense: |  |  |  |  |
Federal | $ | 40.8 |  |  | $ | 33.9 |  |  | $ | 38.3 |
State and other | 9.1 |  |  | 7.0 |  |  | 6.2 |
| 49.9 |  |  | 40.9 |  |  | 44.5 |
Deferred tax expense: |  |  |  |  |
Federal | 13.4 |  |  | 11.5 |  |  | 10.2 |
State and other | 3.4 |  |  | 2.3 |  |  | 2.3 |
| 16.8 |  |  | 13.8 |  |  | 12.5 |
Income tax expense | $ | 66.7 |  |  | $ | 54.7 |  |  | $ | 57.0 |
A reconciliation of the federal statutory rate to the Company's effective income tax rate follows:
| Year Ended September 30,
| 2024 |  | 2023 |  | 2022
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State, net of federal benefit | 3.7 |  |  | 3.4 |  |  | 3.0 |
Valuation allowance | — |  |  | (0.1) |  |  | (0.1) |
Other | — |  |  | 0.4 |  |  | 0.3 |
Effective tax rate | 24.7 | % |  | 24.7 | % |  | 24.2 | %
The effective tax rate for all years includes an expense for state income taxes and nondeductible expenses. Significant components of deferred taxes are:
| September 30,
| 2024 |  | 2023
| (In millions)
Deferred tax assets: |  |  |
Real estate | $ | 11.9 |  |  | $ | 10.5 |
Employee benefits | 3.8 |  |  | 2.8 |
Net operating loss carryforwards | 0.9 |  |  | 1.0 |
Accruals not deductible until paid | 0.8 |  |  | 0.8 |
Total deferred tax assets | 17.4 |  |  | 15.1 |
Valuation allowance | (0.8) |  |  | (0.9) |
Total deferred tax assets, net of valuation allowance | 16.6 |  |  | 14.2 |
Deferred tax liabilities: |  |  |
Deferral of profit on lot sales | (84.1) |  |  | (64.9) |
Total deferred tax liabilities | (84.1) |  |  | (64.9) |
Deferred tax liability, net | $ | (67.5) |  |  | $ | (50.7) |
At September 30, 2024, the Company had tax benefits of $0.9 million related to state NOL carryforwards, of which $0.4 million will expire between 2030 and 2037 while the remaining $0.5 million do not have an expiration date. The Company had a valuation allowance of $0.8 million and $0.9 million at September 30, 2024 and 2023, respectively, because it is more likely than not that a portion of the Company's state deferred tax assets, primarily NOL carryforwards, will not be realized because the Company is no longer operating in some states or the NOL carryforward periods are too brief to realize the related deferred tax asset. The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance on its deferred tax assets. Any reversal of the valuation allowance in future periods will impact the effective tax rate. The Company is subject to a Tax Sharing Agreement with D.R. Horton. The agreement sets forth an equitable method for reimbursements of tax liabilities or benefits between the Company and D.R. Horton related to state and local income, margin or franchise tax returns that are filed on a unitary basis with D.R. Horton. In accordance with the agreement, the Company reimbursed D.R. Horton $2.2 million, $1.7 million and $0.7 million in fiscal 2024, 2023 and 2022, respectively, for its tax expense generated in fiscal 2023, 2022 and 2021. The Company files income tax returns in the U.S. and in various state jurisdictions. The federal statute of limitations for tax years prior to 2021 is closed and the statute of limitations in major state jurisdictions for tax years prior to 2019 is closed. The Company is not currently being audited by the IRS. T he Company is under audit by various states; however, the Company is not aware of any significant findings by the state taxing authorities. The Company had no unrecognized tax benefits at September 30, 2024, 2023 and 2022.

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