Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 7. Income Taxes

Earnings before income taxes were derived from the following sources:

	2023		2022	2021
Domestic	$	1,392.7	1,335.7	1,100.3
Foreign	129.3		104.3	107.5
Earnings before income taxes	$	1,522.0	1,440.0	1,207.8

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

	2023				2022			2021
	Current		Deferred	Total	Current	Deferred	Total	Current	Deferred	Total
Federal	$	273.3	(9.2)	264.1	267.6	(5.0)	262.6	214.3	(11.4)	202.9
State	59.6		(1.3)	58.3	58.0	(1.1)	56.9	46.7	(1.7)	45.0
Foreign	44.9		(0.3)	44.6	35.0	(1.4)	33.6	34.1	0.8	34.9
Income tax expense	$	377.8	(10.8)	367.0	360.6	(7.5)	353.1	295.1	(12.3)	282.8

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

	2023				2022				2021
	Amount		Percent		Amount		Percent		Amount		Percent
U.S. federal statutory income tax	$	319.6	21.0	%	$	302.4	21.0	%	$	253.6	21.0	%
State income taxes, net of federal benefit	$	45.1	3.0	%	$	45.6	3.2	%	$	34.9	2.9	%
Other, net	$	2.3	0.1	%	$	5.1	0.3	%	$	(5.7)	-0.5	%
Effective income tax rate	$	367.0	24.1	%	$	353.1	24.5	%	$	282.8	23.4	%

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

	2023		2022
Deferred income tax assets:
Inventory costing and valuation methods	$	5.6	6.7
Insurance reserves	8.3		8.6
Foreign net operating loss and credit carryforwards	3.0		2.6
Stock-based compensation	3.8		3.6
Operating lease liabilities	69.5		62.6
Section 174 capitalization	7.4		3.4
Other, deferred tax assets	9.4		9.6
Total deferred income tax assets	107.0		97.1
Less: Valuation allowances	(2.2)		(1.8)
Total net deferred income tax assets	104.8		95.3
Property and equipment	(95.4)		(102.6)
Operating lease ROU assets	(68.3)		(61.5)
Prepaid expenses	(3.5)		(3.5)
Other, deferred tax liabilities	(0.4)		(1.3)
Total deferred income tax liabilities	(167.6)		(168.9)
Net deferred income tax liabilities	$	(62.8)	(73.6)

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

	2023		2022
Balance at beginning of year:	$	10.1	7.4
Increase related to prior year tax positions	5.6		3.5
Increase related to current year tax positions	0.6		0.6
Decrease related to statute of limitation lapses	(6.1)		(0.9)
Settlements	—		(0.5)
Balance at end of year:	$	10.2	10.1

Included in the liability for gross unrecognized tax benefits is $3.8 as of December 31, 2023 and $0.7 as of December 31, 2022 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 $9.2 as of December 31, 2023 and $8.6 as of December 31, 2022. We believe it is reasonably possible that a decrease of up to $1.4 in unrecognized tax benefits may be recognized by the end of 2024 as a result of the lapse of the statute of limitations. The 2023 and 2022 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 2020 in the case of United States federal examinations, and with limited exception, before 2018 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 $514.7 of undistributed earnings from foreign subsidiaries to the U.S. as those earnings continue to be permanently reinvested.