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Note 12 - Income Tax
 9 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 12 - Income Tax

 

Our income tax provision during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, adjusted for any discrete items occurring during the relevant interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year and changes in tax law and tax rates. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known, or the tax environment changes.

 

Our effective tax rate for continuing operations during the three months ended  September 30, 2025 and  September 30, 2024 was 5.4% and 25.1%, respectively. Our effective tax rate for continuing operations during the nine months ended  September 30, 2025 and  September 30, 2024 was 6.9% and 9.7%, respectively. The primary reason for the difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results from the federal Work Opportunity Tax Credit, which is designed to encourage employers to hire workers from certain targeted groups with higher-than-average unemployment rates. Other differences result from state income taxes, certain non-deductible expenses, and tax effects of stock-based compensation.
 
We use an intra-period tax allocation to allocate total income tax expense or benefit to the different components of continuing operations and discontinued operations. This allocation uses a with and without methodology to determine income tax expense for discontinued operations. Tax benefit allocated to discontinued operations was approximately $36 thousand and $14 thousand for the three months ended  September 30, 2025 and  September 30, 2024, respectively, and approximately $63 thousand and $49 thousand for the nine months ended  September 30, 2025 and  September 30, 2024, respectively.
 
Impacts of Government Legislation
On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law, which includes significant changes to federal tax law and other regulatory provisions that may impact the Company. We are currently evaluating the provisions of the new law and the potential effects on our financial position, results of operations, and cash flows. However, the Company does not expect the new law to have a material impact on its results of operations, financial condition, or liquidity.