NOTE 9—INCOME TAXES

The income tax expense during each of the three months ended December 27, 2019 and December 28, 2018 follows:



	Three Months Ended
	December 27, 2019		December 28, 2018
(in thousands)
Income tax expense	$	336	$	312

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including discrete items, changes in the mix and amount of pre-tax income, changes in tax laws, business reorganizations, and settlements with taxing authorities, if any.

The Company's estimated annual effective tax rate for fiscal 2020 is comprised of the federal tax rate of 21% plus the state tax rate of 1.58%, which is adjusted for permanent book tax differences. During the three months ended December 27, 2019, the permanent items included meals and entertainment and stock based compensation. There were no material discrete items recognized in the three months ended December 27, 2019.