Income Taxes

12 Months Ended

Mar. 30, 2024

Income Taxes [Abstract]

Income Taxes

Note 8 – Income Taxes

Provision for Income Taxes
(thousands)		2024		2023		2022
Current:
Federal	$	4,910	$	11,174	$	256
State		368		2,703		1,442
Total current		5,278		13,877		1,698
Deferred:
Federal		5,649		1,855		12,602
State		3,382		2,387		1,417
Total deferred		9,031		4,242		14,019
Total provision	$	14,309	$	18,119	$	15,717

Income Tax Rate Reconciliation	2024		2023		2022
Expected U.S. federal income taxes at statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	5.7		4.9		3.0
Tax adjustments (a)	0.0		5.3		(4.0)
Other	0.9		0.5		0.3
Effective tax rate	27.6	%	31.7	%	20.3	%

(a)The 2023 adjustments reflect expense due to the sale of our wholesale tire locations and tire distribution assets as well as the revaluation of deferred tax balances due to changes in the mix of pre-tax income in various U.S. state jurisdictions because of the sale. The 2022 adjustments reflect benefit due to differences in statutory tax rates from a loss year to years in which such net operating loss may be carried back.

As provided under the Coronavirus Aid, Relief and Economic Security Act, a taxpayer must carry net operating losses generated in certain tax years to the earliest tax year in the five-year carryback period. Under this provision, Monro has carried back a net operating loss generated in fiscal 2021 to carryback years within the five-year carryback period with a 35% U.S. federal statutory tax rate.

Net Deferred Tax Asset/(Liability)
(thousands)		March 30, 2024		March 25, 2023
Deferred tax assets:
Lease liabilities	$	155,158	$	174,055
Insurance Accrual		11,304		10,288
Other		15,060		15,670
Total gross deferred tax assets		181,522		200,013
Valuation allowance		(162)		—
Total deferred tax assets		181,360		200,013
Deferred tax liabilities:
Leased assets		(120,479)		(136,057)
Goodwill		(79,895)		(70,145)
Property and equipment		(16,099)		(20,631)
Other		(1,849)		(878)
Total deferred tax liabilities		(218,322)		(227,711)
Total net deferred tax liability	$	(36,962)	$	(27,698)

We have $6.1 million of state net operating loss carryforwards available as of March 30, 2024. The state net operating loss carryforwards expire in varying amounts through 2044.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of March 30, 2024, we concluded, based on the weight of all available positive and negative evidence, that most of our deferred tax assets are more likely than not to be realized.

Changes in Liability for Unrecognized Tax Benefits
(thousands)		2024		2023		2022
Balance at beginning of period	$	3,709	$	5,006	$	5,035
Additions based on tax positions related to the current year		—		97		1,271
Additions for tax positions of prior years		67		—		49
Reductions for tax positions of prior years		—		(224)		—
Lapse in statutes of limitation		(1,391)		(1,170)		(1,349)
Balance at end of period	$	2,385	$	3,709	$	5,006

The total amount of unrecognized tax benefits was $2.4 million, $3.7 million, and $5.0 million at March 30, 2024, March 25, 2023, and March 26, 2022, respectively, the majority of which, if recognized, would affect the effective tax rate.

In the normal course of business, Monro provides for uncertain tax positions and the related interest and penalties and adjusts its unrecognized tax benefits and accrued interest and penalties and, accordingly, we had approximately $0.1 million of interest and penalties associated with uncertain tax benefits accrued as of March 25, 2023. We did not have any interest and penalties associated with uncertain tax benefits accrued as of March 30, 2024.

We file U.S. federal income tax returns and income tax returns in certain state jurisdictions. Our U.S. federal income tax returns for 2021 – 2023 and various state tax years remain subject to income tax examinations by tax authorities.