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Note 14 - Income Taxes
 6 Months Ended
Jun. 28, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

14.   Income Taxes

 

The Company recognized $3.6 million of income tax expense for the twenty-six weeks ended June 28, 2025 as compared to $2.9 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 31.0% as compared to 27.6% for the comparable prior-year period. The effective income tax rates for the twenty-six weeks ended June 28, 2025, were approximately 31.7%, 25.1%, and 11.8% in the United States, Canada, and Europe, respectively. The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and European pretax income versus U.S. pretax income. The effective income tax rate can also be impacted by discrete permanent differences affecting any period presented. The comparable prior-year period estimated income tax rates were 28.3%, 26.8%, and 15.4% in the United States, Canada, and Europe, respectively. The primary reason for the increase in the consolidated and United States effective rates in the current period is due to increases to permanent tax differences in the United States. The low effective tax rate in Europe during the current period is due to a fixed tax benefit relative to a small pretax loss.

 

Differences between the effective tax rate and the applicable U.S. federal statutory rate may arise, primarily from the effect of state and local income taxes, share-based compensation, and potential tax credits available to the Company. The actual 2025 effective tax rate may vary from the estimate depending on the actual operating income earned in various jurisdictions, the potential availability of tax credits, the vesting of share-based awards, and the amount of any permanent book to tax differences.

 

The One Big Beautiful Bill Act (OBBBA) was signed on July 4, 2025. The Company does not expect the OBBBA to have a material impact on its tax position.