Blue Bird CorpBLBD
Blue Bird Corp Income Taxes Disclosure
9. Income Taxes
On July 4, 2025, Public Law No. 119-21, the One Big Beautiful Bill Act ("OBBBA"), was signed into law. The OBBBA includes comprehensive legislation addressing budget and spending matters that is intended, among others, to reduce taxes; reduce or increase spending, as applicable, for certain federal programs; increase the statutory debt limit and otherwise address certain agencies and programs throughout the federal government. The OBBBA permanently extends, with modifications, certain tax provisions that were enacted as part of the Tax Cut and Jobs Act ("TCJA") that became effective on January 1, 2018, but that were set to change or expire at the end of calendar year 2025. The Act also features certain modified and new tax relief measures for businesses. Additionally, it includes various revenue-raising measures, including changes to certain Inflation Reduction Act ("IRA") clean energy tax credits and various limits on business tax deductions, that are intended to offset part of the cost of the new legislation.
As required by the provisions of ASC 740, the Company recognized the effects of changes in tax laws resulting from the signing of the OBBBA during the fourth quarter of fiscal 2025. During fiscal 2025, the OBBBA legislation increased bonus deprecation that could be taken for tax purposes on qualifying fixed assets that were acquired and placed in service after the specified effective date. This change is reflected in our recording of the components of income tax expense reflected in the table below. However, several of the more significant changes in the OBBBA that are applicable to the Company become effective for income tax years beginning after December 31, 2024 (i.e., during fiscal 2026 for the Company) and accordingly, the impact from the OBBBA is not reflected in the Company's recognition of income tax expense in fiscal 2025.
The components of income tax (expense) benefit were as follows for the fiscal years presented:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax provision: | |||||||||||||||||
| Federal | $ | (35,079) | $ | (30,188) | $ | (645) | |||||||||||
| State | (6,177) | (4,447) | (243) | ||||||||||||||
| Foreign | 267 | (267) | — | ||||||||||||||
Total current tax expense | $ | (40,989) | $ | (34,902) | $ | (888) | |||||||||||
| Deferred tax provision: | |||||||||||||||||
| Federal | $ | (3,328) | $ | 2,046 | $ | (6,230) | |||||||||||
| State | 391 | (372) | (1,835) | ||||||||||||||
Total deferred tax (expense) benefit | (2,937) | 1,674 | (8,065) | ||||||||||||||
Income tax expense | $ | (43,926) | $ | (33,228) | $ | (8,953) | |||||||||||
At September 27, 2025, the Company had $6.4 million (tax effected) in total state tax attributes, primarily comprised of $5.9 million (tax effected) in state tax credit carryforwards and less than $0.1 million (tax effected) in state net operating loss ("NOL") carryforwards. The Company maintains a partial valuation allowance on these state tax attributes. Specifically, the Company estimates that approximately $3.4 million (tax effected) of state tax credit carryforwards will expire unused between 2025 and 2032 and less than $0.1 million (tax effected) of state NOL carryforwards will expire unused between 2028 and 2033.
At September 27, 2025, the Company had no federal NOL carryforwards.
The effective tax rates for fiscal 2025, fiscal 2024 and fiscal 2023 were 25.9%, 26.2% and 34.7%, respectively.
The effective tax rate for fiscal 2025 differed from the statutory federal income tax rate of 21.0%. The increase in the effective tax rate to 25.9% was primarily due to the impacts of state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from discrete period items.
The effective tax rate for fiscal 2024 differed from the statutory federal income tax rate of 21.0%. The increase in the effective tax rate to 26.2% was primarily due to the impacts of state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from federal and state tax credits (net of valuation allowances) and discrete period items.
The effective tax rate for fiscal 2023 differed from the statutory federal income tax rate of 21.0%. The increase in the effective tax rate to 34.7% was primarily due to the impacts of state taxes and certain permanent items on the federal rate.
A reconciliation between the reported income tax expense and the amount computed by applying the statutory federal income tax rate is as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Federal tax expense at statutory rate | $ | (33,780) | $ | (26,594) | $ | (5,419) | |||||||||||
(Increase) reduction in income tax expense resulting from: | |||||||||||||||||
| State taxes, net | (6,584) | (4,808) | (1,700) | ||||||||||||||
| Change in uncertain tax positions | — | — | 240 | ||||||||||||||
| Share-based compensation | (2,893) | (675) | (95) | ||||||||||||||
| Permanent items | (70) | (700) | (1,582) | ||||||||||||||
| Valuation allowance | 74 | (17) | (319) | ||||||||||||||
| Tax credits | (273) | 273 | 330 | ||||||||||||||
| Return to accrual adjustments | 149 | 4 | 3 | ||||||||||||||
| Investor tax on non-consolidated affiliate income | (706) | (700) | (404) | ||||||||||||||
| Other | 157 | (11) | (7) | ||||||||||||||
Income tax expense | $ | (43,926) | $ | (33,228) | $ | (8,953) | |||||||||||
The guidance for accounting for uncertainty in income taxes requires that a determination be made regarding whether a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination, which is the threshold required for recognition of the tax position in the financial statements. The Company's liability arising from uncertain tax positions ("UTPs"),
including accrued interest and penalties, is recorded in other liabilities in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance, beginning of year | $ | — | $ | — | $ | 110 | |||||||||||
| Lapses of applicable statute of limitations | — | — | (110) | ||||||||||||||
| Balance, end of year | $ | — | $ | — | $ | — | |||||||||||
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no accrued interest and penalties at September 27, 2025 or September 28, 2024.
The Company is subject to taxation mostly in the U.S. and various state jurisdictions. At September 27, 2025, tax years prior to 2021 are generally no longer subject to examination by federal and most state tax authorities.
The following table sets forth the sources of and differences between the financial accounting and tax bases of the Company’s assets and liabilities which give rise to the net deferred tax liabilities at the dates indicated:
| (in thousands) | September 27, 2025 | September 28, 2024 | |||||||||
| Deferred tax liabilities | |||||||||||
| Property, plant and equipment | $ | (11,974) | $ | (9,894) | |||||||
| Other intangible assets | (10,263) | (10,679) | |||||||||
| Investor tax on non-consolidated affiliate income | (1,967) | (1,261) | |||||||||
Right-of-use assets | (1,503) | — | |||||||||
Other | (701) | (566) | |||||||||
| Total deferred tax liabilities | $ | (26,408) | $ | (22,400) | |||||||
| Deferred tax assets | |||||||||||
| NOL carryforward | $ | 112 | $ | 731 | |||||||
| Accrued expenses | 6,691 | 8,017 | |||||||||
| Compensation | 794 | 2,257 | |||||||||
| Interest limitation carryforward | 60 | — | |||||||||
| Inventories | 550 | 812 | |||||||||
Capitalized research & development | 6,616 | 5,035 | |||||||||
| Unearned income | 4,864 | 4,301 | |||||||||
| Tax credits | 5,866 | 6,702 | |||||||||
Outside basis difference in investment | 1,827 | — | |||||||||
Lease liabilities | 1,557 | — | |||||||||
Other | 25 | — | |||||||||
| Total deferred tax assets | $ | 28,962 | $ | 27,855 | |||||||
| Less: valuation allowance | (5,296) | (5,839) | |||||||||
| Deferred tax assets less valuation allowance | $ | 23,666 | $ | 22,016 | |||||||
Net deferred tax liabilities | $ | (2,742) | $ | (384) | |||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 24, 2025 | Showing above |
| 2024 | Nov 25, 2024 | |
| 2023 | Dec 11, 2023 | |
| 2022 | Dec 12, 2022 | |
| 2021 | Dec 15, 2021 | |
| 2020 | Dec 17, 2020 | |
| 2019 | Dec 12, 2019 | |
| 2018 | Dec 12, 2018 | |
| 2017 | Dec 8, 2017 | |
| 2016 | Dec 15, 2016 | |
| 2015 | Dec 15, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.