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Note 14 - Income Taxes
 9 Months Ended
Sep. 27, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

14.

Income Taxes

 

The Company recognized $4.7 million of income tax expense for the thirty-nine weeks ended September 27, 2025 as compared to $4.0 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 31.3% as compared to 27.5% for the comparable prior-year period. The effective income tax rates for the thirty-nine weeks ended September 27, 2025, were approximately 32.1%, 26.2%, 68.1%, and 24.4% in the United States, Canada, Europe, and the Philippines, 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%, 26.2%, and 13.1% 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 high effective tax rate in Europe during the current period is due to low pretax income and certain fixed taxes.

 

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 impact on income taxes due to change in legislation is required, under Accounting Standards Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted, which is this fiscal year. In general, the OBBBA introduces changes to U.S. taxation, including changes in the taxation of non-U.S. income. The Company assessed the changes and concluded that they were not material.