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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
7. Income Taxes
The provision for income taxes consists of the following:
 YEARS ENDED DECEMBER 31,
(in thousands)202420232022
Current tax expense:
Federal$14,067 $16,530 $17,535 
State5,014 5,998 6,400 
Deferred tax expense(1,871)1,647 3,076 
Total Income tax expense$17,210 $24,175 $27,011 
The provision for income taxes shown above varied from the statutory federal income tax rate as follows:
 YEARS ENDED DECEMBER 31,
 202420232022
Federal income tax rate21.0 %21.0 %21.0 %
State income taxes, net of Federal tax effect5.6 6.0 5.4 
Non-deductible compensation and meals and entertainment1.8 2.3 2.5 
Tax credits(1.5)(0.8)(1.2)
Tax benefit from restricted stock vesting(0.3)(0.8)(1.0)
Other(1.2)0.7 (0.3)
Effective tax rate25.4 %28.4 %26.4 %
The 2024 effective tax rate was favorably impacted by a reduction in nondeductible executive compensation, non-taxable proceeds from company-owned life insurance, and the recognition of research and development tax credits, as compared to 2023. The 2023 effective rate was unfavorably impacted by a lower Work Opportunity Tax Credit, a lower tax benefit from the vesting of restricted stock and higher non-deductible expenses, as compared to 2022.
Deferred tax assets and liabilities are composed of the following:
 DECEMBER 31,
(in thousands)20242023
Deferred tax assets:
Deferred compensation obligation$6,549 $6,616 
Operating lease liabilities3,923 4,071 
Research and development2,027 — 
Stock-based compensation1,561 1,475 
Accrued liabilities995 1,345 
Accounts receivable reserves399 382 
Other8 8 
Deferred tax assets15,462 13,897 
Deferred tax liabilities:
Fixed assets(3,700)(4,307)
ROU assets for operating leases(3,512)(3,684)
Goodwill(2,291)(2,401)
Prepaid expenses(513)(367)
Other(437)— 
Deferred tax liabilities(10,453)(10,759)
Valuation allowance— — 
Total Deferred tax assets, net$5,009 $3,138 
In evaluating the realizability of Kforce’s deferred tax assets, management assesses whether it is more likely than not that some portion, or all, of the deferred tax assets will be realized. Management considers, among other things, the ability to generate future taxable income (including reversals of temporary differences and projections of future taxable income) during the periods in which the related temporary differences will become deductible.
Kforce is periodically subject to IRS audits, as well as state and other local income tax audits for various tax years. Although Kforce has not experienced any material liabilities in the past due to income tax audits, Kforce can make no assurances concerning any future income tax audits.
Kforce and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. With a few exceptions, Kforce is no longer subject to federal, state, local, or non-U.S. income tax examinations by tax authorities for years before 2021.