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Note 8 - Income Taxes
 3 Months Ended
Dec. 28, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

(8) Income Taxes

 

Effective income tax rate. Our effective income tax rate was 26.1% for the three-month period ended December 28, 2024, compared with 27.2% for the three-month period ended December 30, 2023. The effective income tax rates for both periods were based upon the estimated rate applicable for the entire fiscal year adjusted to reflect any significant or discrete items related specifically to interim periods. The decrease in the effective rate for the three-month period ended December 28, 2024, is primarily attributed to the calculation of state deferred tax balances, which were treated as discrete in the current period.

 

Deferred income taxes. As of December 28, 2024, and September 28, 2024, we recorded a deferred tax liability (net of valuation allowance) of $12.4 million and $11.6 million, respectively, in other liabilities on our consolidated balance sheets. We have $2.2 million of state net operating loss carryforwards (“NOLs”) that expire between 2031 and 2040.

 

The realization of our deferred tax assets is entirely dependent upon our ability to generate future taxable income in applicable jurisdictions. GAAP requires that we periodically assess the need to establish a reserve against our deferred tax assets to the extent we no longer believe it is more likely than not that they will be fully realized. As of December 28, 2024, and September 28, 2024, we recorded a valuation allowance of $149,000 pertaining to deferred tax assets that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances.

 

Uncertainty in income taxes. We establish contingency reserves for material, known tax exposures based on our assessment of the estimated liability that would be incurred in connection with the settlement of such matters. As of December 28, 2024, we had no material, known tax exposures that required the establishment of contingency reserves for uncertain tax positions.

 

We file U.S. federal, state and local income tax returns in various jurisdictions. Federal and various state tax returns filed subsequent to 2019 remain subject to examination.