INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

12.INCOME TAXES

CoreCivic recorded an income tax expense of $28.2 million, $43.0 million, and $138.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Income tax expense during 2021 included $114.2 million primarily resulting from the revaluation of the Company's net deferred tax liabilities due to the completion of all significant actions necessary to revoke its REIT election. No catch-up tax payments or penalties resulted from the revocation of the Company's REIT election.

Income tax expense is comprised of the following components (in thousands):

	For the Years Ended December 31,
	2023			2022			2021
Current income tax expense
Federal	$	25,037		$	25,681		$	32,137
State		5,899			5,840			6,592
		30,936			31,521			38,729
Deferred income tax expense (benefit)
Federal		(2,156	)		11,484			86,703
State		(547	)		(23	)		12,567
		(2,703	)		11,461			99,270
Income tax expense	$	28,233		$	42,982		$	137,999

Significant components of CoreCivic's deferred tax assets and liabilities as of December 31, 2023 and 2022, are as follows (in thousands):

	December 31,
	2023			2022
Noncurrent deferred tax assets:
Asset reserves and liabilities not yet deductible for tax	$	14,915		$	8,625
Accrued compensation not yet deductible for tax		12,419			9,913
Accrued workers comp liabilities not yet deductible for tax		11,333			10,976
Depreciation		8,669			8,502
ROU lease assets		25,282			33,226
Losses and tax credit carryforwards		1,591			1,807
Intangible assets		7,669			7,836
Other		9,010			9,954
Total noncurrent deferred tax assets		90,888			90,839
Less valuation allowance		(848	)		(848	)
Total noncurrent deferred tax assets		90,040			89,991
Noncurrent deferred tax liabilities:
Depreciation		(151,918	)		(148,255	)
Lease liabilities		(24,721	)		(32,663	)
Intangible liabilities		(7,860	)		(7,557	)
Other		(2,456	)		(1,134	)
Total noncurrent deferred tax liabilities		(186,955	)		(189,609	)
Net total noncurrent deferred tax liabilities	$	(96,915	)	$	(99,618	)

A reconciliation of the income tax provision at the statutory income tax rate and the effective tax rate as a percentage of income from continuing operations before income taxes for the years ended December 31, 2023, 2022, and 2021 is as follows:

	2023			2022			2021
Statutory federal rate		21.0	%		21.0	%		21.0	%
Revaluation of deferred tax liabilities		—			—			132.7
State taxes, net of federal tax benefit		4.5			3.4			4.8
Permanent differences		4.3			1.7			2.8
Tax expense (benefit) of equity-based compensation		(0.3	)		—			2.6
Other items, net		—			(0.1	)		(3.6	)
		29.5	%		26.0	%		160.3	%

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). The CARES Act, among other things, incentivized companies to retain employees through an Employee Retention Credit ("ERC"). The ERC compensates employers for wages of employees that were retained and could not perform their job duties at 100% capacity as a result of coronavirus pandemic restrictions. In December 2020, the Consolidated Appropriations Act provided additional funding for the ERC with expanded benefits through June 30, 2021. During the year ended December 31, 2022, the Company recorded an ERC of $7.0 million, which offset operating expenses. The credit was reduced by $1.8 million of federal income tax expense.

The Inflation Reduction Act of 2022 (the "Inflation Reduction Act") was signed into law on August 16, 2022. Among other provisions, such act creates an excise tax of 1% on the fair value of net stock repurchases in excess of share issuances made by publicly traded U.S. corporations, effective for repurchases after December 31, 2022. The impact of this excise tax on the Company’s financial position, and/or liquidity, in future periods, will vary based on the level of net stock repurchases in excess of share issuances made by the Company in a given year. The Company has concluded that the excise tax associated with stock repurchases is properly recognized as a component of equity given that it is a direct cost associated with the repurchase of common stock. The excise tax recognized during the year ended December 31, 2023 was estimated to be $0.3 million associated with the repurchase of 3.5 million shares, net of the shares issued for restricted stock plans as permitted by the issuance offset rule under the Inflation Reduction Act.

CoreCivic had no liabilities for uncertain tax positions as of December 31, 2023 and 2022. CoreCivic recognizes interest and penalties related to unrecognized tax positions in income tax expense. CoreCivic does not currently anticipate that the total amount of unrecognized tax positions will significantly change in the next twelve months.

CoreCivic's U.S. federal income tax returns for tax years 2020 through 2022 remain subject to examination by the Internal Revenue Service ("IRS"). The majority of states in which CoreCivic files income tax returns follow the same statute of limitations as the federal government. Certain states in which CoreCivic files income tax returns have statutes that remain open from 2019.