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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Taxes [Abstract]  
Income Taxes
13. Income Taxes

 

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2017.

 

The federal and state income tax provision consisted of the following:

 

Year ended December 31,  2023   2022   2021 
   Current   Deferred   Current   Deferred   Current   Deferred 
Federal  $14,763   $(5,285)  $21,741   $(4,694)  $42,422   $863 
State   1,713    (582)   3,779    (879)   7,279    131 
   $16,476   $(5,867)  $25,520   $(5,573)  $49,701   $994 

 

The effective income tax rate varied from the statutory federal income tax rate as follows:

 

Year ended December 31,  2023   2022   2021 
Statutory federal income tax rate   21.0%    21.0%    21.0% 
State income taxes, net of federal tax benefit   2.2    2.7    3.4 
Research and development tax credits   (2.7)   (4.2)   (0.4)
Other   (2.5)   (1.1)   0.5 
Effective income tax rate   18.0%    18.4%    24.5% 

 

The Company estimates that its effective tax rate in 2024 will approximate 21%.

 

Significant components of the Company’s deferred tax assets and liabilities are as follows:

 

December 31,  2023   2022 
Deferred tax assets          
           
Capitalized research and development costs   9,144    4,838 
Employee compensation and benefits   2,452    2,316 
Allowances for doubtful accounts and discounts   431    637 
Inventories   1,635    1,196 
Stock-based compensation   1,698    1,661 
Other   1,608    1,705 
Total deferred tax assets   16,968    12,353 
Deferred tax liabilities:          
Depreciation   3,578    5,070 
Other   1,414    1,174 
Total deferred tax liabilities   4,992    6,244 
Net deferred tax assets  $11,976   $6,109 

 

Prior to 2022, the Company expensed research and development costs in the period in which they were incurred for both financial accounting and income tax purposes. In 2022 the Company adopted the provisions of the Tax Cuts and Jobs Act of 2017 that relate to IRS Code Section 174. Under these provisions, research and development costs must be capitalized and amortized over five years for income tax purposes. The Company continues to expense these costs in the period incurred for financial accounting purposes.

 

The Company made income tax payments of approximately $26.0 million, $28.7 million, and $49.5 million, during 2023, 2022, and 2021, respectively. The Company expects to realize its deferred tax assets through tax deductions against future taxable income.

 

The Company does not believe it has included any “uncertain tax positions” in its federal income tax return or any of the state income tax returns it is currently filing. The Company has made an evaluation of the potential impact of additional state taxes being assessed by jurisdictions in which the Company does not currently consider itself liable. The Company does not anticipate that such additional taxes, if any, would result in a material change to its financial position.