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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
Income Taxes Note 10: Income Taxes

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures, primarily related to the effective tax rate reconciliation and income taxes paid.

The Company adopted ASU 2023-09 prospectively for the year ended December 31, 2025. The standard did not have a material impact on the Company’s consolidated financial statements. Prior-period disclosures have not been retrospectively adjusted.

Income before income taxes consisted of the following:

Current Year - ASU 2023-09 (Prospective Adoption)

Years Ended December 31,

2025

2024

2023

(in thousands)

Domestic

$

(5,855)

$

3,605

$

14,116

Foreign

-

(363)

(122)

Total (loss) income before income taxes

$

(5,855)

$

3,242

$

13,994

The components of the provision for income taxes consisted of the following:

Years Ended December 31,

2025

2024

2023

(in thousands)

Current

Federal

$

(112)

$

(428)

$

(2,087)

State

(191)

(127)

(556)

Total Current

(303)

(555)

(2,643)

Deferred

Federal

1,269

(222)

(794)

State

395

(144)

(486)

Total Deferred

1,664

(366)

(1,280)

Total Benefit (Provision) for Income Taxes

$

1,361

$

(921)

$

(3,923)

The following table reflects the effective income tax rate reconciliation for the year ended December 31, 2025 (ASU 2023-09 (Prospective Adoption)):

2025

Amounts

(in thousands)

% of Statutory Tax

Tax at US federal statutory rate

$

1,230

21.0

%

State and local income taxes, net of federal benefit*

163

2.8

%

Other

(32)

(0.5)

%

Benefit (Provision) for Income Taxes

$

1,361

23.2

%

*State taxes in Texas, Illinois, Minnesota, Michigan, Virginia, Maryland, and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.

The following table reflects the effective income tax rate reconciliation for the years ended December 31, 2024 and 2023 (ASU 2023-09 (Prospective Adoption)):

2024

2023

Federal statutory rate

21.0

%

21.0

%

State income taxes, net of the federal tax benefit

8.0

5.9

Stock based compensation

(3.9)

1.6

Non-deductible meals and entertainment

1.3

0.3

Tax credits

(1.1)

(0.6)

Foreign rate differential

2.3

0.2

Other

0.8

(0.4)

Effective tax rate

28.4

%

28.0

%

The Company’s effective tax rate was 23.2%, 28.4%, and 28.0% for the years ended December 31, 2025, 2024, and 2023, respectively. Year-over-year changes in the effective tax rate were primarily driven by fluctuations in pretax income, including a pretax loss in 2025, and the resulting disproportionate impact of certain permanent items.

Income taxes paid, net of refunds received, were as follows for the year ended December 31, 2025 (ASU 2023-09 (Prospective Adoption)):

2025

(in thousands)

Federal

$

469

State and local:

Illinois

50

Texas

59

Other state and local jurisdictions

19

Foreign

-

Total Income taxes paid

$

597

Components of net deferred income taxes were as follows at December 31:

2025

2024

(in thousands)

Deferred income tax assets:

Section 743 carryforward

$

2,688

$

4,388

Inventory

2,338

1,666

Operating lease liabilities

34,721

36,851

Other

4,628

2,598

Total deferred income tax assets

$

44,375

$

45,503

Deferred income tax liabilities

Depreciation

$

2,491

$

3,635

Operating lease right-of-use assets

34,582

36,418

Other

748

560

Total deferred income tax liabilities

37,821

40,613

Net deferred income tax assets

$

6,554

$

4,890

As of December 31, 2025, the Company had tax effected net operating loss carryforwards of approximately $1.4 million and $0.6 million for federal and state tax purposes, respectively. The federal attributes have an indefinite carryforward period and the state attributes have a carryforward period ranging from five years to indefinitely.

The Company closed its foreign operations in 2024 and, as such, there are no foreign unremitted earnings as of December 31, 2025 or 2024.

The Company records interest and penalties through income tax expense relating to uncertain tax positions. As of December 31, 2025, 2024 and 2023, the Company has not recognized any liabilities for uncertain tax positions nor has the Company accrued interest and penalties related to uncertain tax positions.

The Company's federal, state, and foreign income tax returns are subject to audit. The Company is not currently under audit by federal or foreign taxing authorities. During 2024, the Minnesota Department of Revenue commenced an audit of the 2020, 2021, and 2022 tax years; the audit remains open. The years open to examination include years ending 2022 to 2024 for federal income tax purposes, years ending 2020 to 2024 for state income tax purposes, and years ending 2021 to 2024 for foreign income tax purposes.