Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 7. Income Taxes

Earnings before income taxes were derived from the following sources:

	2022		2021	2020
Domestic	$	1,335.7	1,100.3	1,046.7
Foreign	104.3		107.5	86.0
Earnings before income taxes	$	1,440.0	1,207.8	1,132.7

Components of income tax expense (benefit) were as follows:

2022:	Current		Deferred	Total
Federal	$	267.6	(5.0)	262.6
State	58.0		(1.1)	56.9
Foreign	35.0		(1.4)	33.6
Income tax expense	$	360.6	(7.5)	353.1

2021:	Current		Deferred	Total
Federal	$	214.3	(11.4)	202.9
State	46.7		(1.7)	45.0
Foreign	34.1		0.8	34.9
Income tax expense	$	295.1	(12.3)	282.8

2020:	Current		Deferred	Total
Federal	$	195.4	1.8	197.2
State	47.5		(0.5)	47.0
Foreign	28.1		1.3	29.4
Income tax expense	$	271.0	2.6	273.6

Income tax expense in the accompanying consolidated financial statements differed from the expected expense as follows:

	2022			2021		2020
U.S. federal statutory income tax rate	21.0		%	21.0	%	21.0	%
U.S. federal income tax expense at statutory rate	$	302.4		253.6		237.9
Increase (decrease) attributed to:
State income taxes, net of federal benefit	45.6			34.9		36.3
Other, net	5.1			(5.7)		(0.6)
Total income tax expense	$	353.1		282.8		273.6
Effective income tax rate	24.5		%	23.4	%	24.2	%

The tax effects of temporary differences that give rise to deferred income tax assets and liabilities at year end consisted of the following: 

	2022		2021 (1)
Deferred income tax assets (liabilities):
Inventory costing and valuation methods	$	6.7	5.2
Insurance reserves	8.6		7.4
Stock-based compensation	3.6		2.8
Operating lease liabilities	62.6		62.6
Foreign net operating loss and credit carryforwards	2.6		1.4
Foreign valuation allowances	(1.8)		(1.7)
Prepaid royalty	0.3		5.9
Section 174 capitalization	3.4		—
Other, deferred tax assets	9.3		10.8
Total deferred income tax assets	95.3		94.4
Property and equipment	(102.6)		(110.0)
Operating lease ROU assets	(61.5)		(61.3)
Other, deferred tax liabilities	(4.8)		(4.3)
Total deferred income tax liabilities	(168.9)		(175.6)
Deferred income tax liabilities	$	(73.6)	(81.2)

(1) The presentation of prior year deferred income tax assets and liabilities has been updated to conform to current period presentation.

A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits is as follows:

	2022		2021
Balance at beginning of year:	$	7.4	8.8
Increase related to prior year tax positions	3.5		0.3
Increase related to current year tax positions	0.6		0.9
Decrease related to statute of limitation lapses	(0.9)		(2.6)
Settlements	(0.5)		—
Balance at end of year:	$	10.1	7.4

Included in the liability for gross unrecognized tax benefits is an immaterial amount for interest and penalties, both of which we classify as a component of income tax expense. The amount of unrecognized tax benefits that would favorably impact the effective tax rate, if recognized, is $8.6 as of December 31, 2022 and $6.5 as of December 31, 2021. We believe it is reasonably possible that a decrease of up to $5.1 in unrecognized tax benefits may be recognized by the end of 2023 as a result of the lapse of the statute of limitations. The 2022 and 2021 liability is included in deferred income taxes in the Consolidated Balance Sheets.

We file income tax returns in the United States federal jurisdiction, all states, and various local and foreign jurisdictions. We are no longer subject to income tax examinations by taxing authorities for taxable years before 2019 in the case of United States federal examinations, and with limited exception, before 2017 in the case of foreign, state, and local examinations.

In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or very minimal. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our approximately $447.6 of undistributed earnings from foreign subsidiaries to the U.S. as those earnings continue to be permanently reinvested.