HAVERTY FURNITURE COMPANIES INCHVT

HAVERTY FURNITURE COMPANIES INC Income Taxes Disclosure

10-KFiled Feb 26, 20263 min read
Income Taxes:
The provision for income taxes for the years ended December 31 consist of the following:
(In thousands)202520242023
Current
Federal$7,573 $6,504 $14,015 
State1,675 1,165 3,548 
9,248 7,669 17,563 
Deferred
Federal(1,521)(296)474 
State(624)(1,176)(1,645)
(2,145)(1,472)(1,171)
Total income tax expense$7,103 $6,197 $16,392 
The differences between income tax expense in the accompanying Consolidated Financial Statements and the amount computed by applying the statutory Federal income tax rate are as follows:
(In thousands)202520242023
Statutory rates applied to income before income taxes$5,635 21.0 %$5,492 21.0 %$15,274 21.0 %
State income taxes, net of Federal tax benefit (a)
699 2.6 %(256)(1.0)%1,156 1.6 %
Federal tax credits(47)(0.2)%188 0.7 %(413)(0.6)%
Nontaxable or nondeductible items
     Executive compensation136 0.5 %553 2.1 %878 1.2 %
     Stock-based compensation552 2.1 %101 0.4 %(646)(0.9)%
     Other128 0.5 %119 0.5 %143 0.2 %
Effective tax rate7,103 26.5 %6,197 23.7 %16,392 22.5 %
(a) State taxes in Florida, Texas and Virginia made up the majority (greater than 50%) of the tax effect in this category for 2025, 2024, and 2023.
Our effective tax rate differs from the federal statutory rate primarily due to state incomes taxes.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The amounts in the following table are grouped based on broad categories of items that generate the deferred tax assets and liabilities.
(In thousands)20252024
Deferred tax assets:
Property and equipment$6,109 $7,193 
Lease liabilities54,055 54,546 
Accrued liabilities13,516 12,437 
Retirement benefits179 98 
State tax credits2,636 2,486 
Other464 418 
Total deferred tax assets76,959 77,178 
Deferred tax liabilities:
Inventory related7,883 8,517 
Right-of-use lease assets48,967 50,495 
Other808 1,091 
Total deferred tax liabilities57,658 60,103 
Net deferred tax assets$19,301 $17,075 
We review our deferred tax assets to determine the need for a valuation allowance. Based on evidence, we concluded that it is more-likely-than-not that our deferred tax assets will be realized and therefore a valuation allowance is not required.
We file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With respect to U.S. federal, state and local jurisdictions, with limited exceptions, we are no longer subject to income tax audits for years before 2021.
Uncertain Tax Positions
Interest and penalties associated with uncertain tax positions, if any, are recognized as components of income tax expense. No amounts for uncertain tax positions were recorded for the years currently open under statute of limitations.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States, which made permanent or extended many of the provisions from the Tax Cuts and Jobs Act of 2017. The Company has accounted for the provisions of the OBBBA in its consolidated financial statements.

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2018Mar 4, 2019
2017Mar 2, 2018
2016Mar 3, 2017

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.

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