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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income tax expense is composed of the following: 
Year Ended December 31,
 202320222021
Current:
Federal$32,296 $26,107 $19,746 
State5,926 4,438 3,489 
Foreign330 (223)294 
 38,552 30,322 23,529 
Deferred:
Federal(4,100)2,870 5,345 
State120 (1,821)1,405 
Foreign44 (71)— 
 (3,936)978 6,750 
Total$34,616 $31,300 $30,279 

Income tax expense also included tax expense allocated to comprehensive income for 2023, 2022, and 2021 of $172, $33, and $19, respectively (see the Consolidated Statements of Comprehensive Income).
 
A reconciliation of income tax expense at the normal statutory federal rate to income tax expense included in the accompanying Consolidated Statements of Income is below:
Year Ended December 31,
202320222021
“Expected” provision at federal statutory rate$29,895 $29,442 $25,435 
State income taxes, net6,545 6,446 5,713 
Foreign income taxes330 (223)294 
Change in valuation allowance1,135 416 204 
Share-based compensation(288)(34)31 
Federal and state tax credits(1,685)(3,506)(1,363)
Other(1,316)(1,241)(35)
Income tax expense$34,616 $31,300 $30,279 
Effective tax rate24.4 %22.3 %25.0 %
 
The tax effects of temporary differences giving rise to deferred income taxes shown on the Consolidated Balance Sheets are as follows:
December 31,
 20232022
Deferred income tax assets:
Share-based compensation$4,453 $2,462 
U.S. state and foreign tax credit carryforwards
3,350 3,991 
Mexico and U.S. state loss carryforwards
3,890 3,040 
Inventories2,656 1,936 
Operating lease liabilities3,740 3,949 
Deferred compensation848 691 
Section 174 timing difference2,032 — 
Other4,279 3,002 
Gross deferred income tax assets25,248 19,071 
Less: valuation allowance(3,208)(2,073)
Net deferred income tax assets22,040 16,998 
Deferred income tax liabilities:
Property, plant and equipment(24,084)(25,623)
Intangibles(48,460)(47,187)
Inventory(2,007)(2,812)
Operating lease right-of-use assets(3,577)(3,850)
Convertible Senior Note(4,716)(2,424)
Other(2,267)(2,214)
Gross deferred income tax liabilities(85,111)(84,110)
Net deferred income tax liability$(63,071)$(67,112)

A schedule of the change in valuation allowance is as follows:
Balance at December 31, 2021
$1,657 
Increase416 
Balance at December 31, 2022
2,073 
Increase1,135 
Balance at December 31, 2023
$3,208 

As of December 31, 2023, the Company’s total valuation allowance of $3,208 related to net operating loss in U.S. states and foreign countries in which it is not “more likely than not” to create enough taxable income to fully utilize the carryforwards before expiration of the carryforward periods and certain foreign tax credit carryforwards. As of December 31, 2022, the Company’s total valuation allowance of $2,073, related to net operating loss in U.S. states and foreign countries in which it is not “more likely than not” to create enough taxable income to fully utilize the carryforwards before expiration of the carryforward periods.

As of December 31, 2023 and 2022, the Company had $23,590 and $21,537 in gross U.S. state net operating loss carryforwards, respectively. Due to varying U.S. state carryforward periods, the state net operating loss carryforwards will primarily expire in varying years between calendar years 2024 and 2044. As of December 31, 2023 and 2022, the Company had gross U.S. state tax credit carryforwards of $3,890 and $5,052, respectively. U.S. state credits, if not used to offset income tax expense in their respective jurisdictions, will expire in varying years between 2024 and 2040.
The Company treats accrued interest and penalties related to tax liabilities, if any, as a component of income tax expense.  During 2023, 2022, and 2021, the Company’s activity in accrued interest and penalties was not significant.

The following is a reconciliation of the total amount of unrecognized tax benefits (excluding interest and penalties) for 2023, 2022, and 2021:
Year Ended December 31,
 202320222021
Beginning of year balance$156 $113 $112 
Additions based on prior year tax positions83 75 — 
Additions based on current year tax positions245 2 31 
Reduction for prior year tax positions(60)(34)(30)
End of year balance$424 $156 $113 

For each period presented, substantially all of the amount of unrecognized benefits (excluding interest and penalties) would impact the effective tax rate, if recognized. The Company reasonably expects that the amount of unrecognized tax benefit will not change significantly over the next 12 months.

The Company is not under any U.S. federal, state or foreign income tax audits. For U.S. federal tax purpose, all tax years after 2019 remain open to examination. Amounts paid for income tax in foreign jurisdictions are not material to the financial statements. In addition, the Company is subject to examination for its state tax returns for years 2019, and forward, with the exception of certain net operating losses and credit carryforwards originating in years prior to 2019 that remain subject to adjustment.