INGLES MARKETS INC Income Taxes Disclosure
Deferred Income Tax Liabilities and Assets – Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates. Significant components of the Company’s deferred tax liabilities and assets were as follows:
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| 2025 |
| 2024 | ||
Deferred tax liabilities: |
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Property and equipment tax/book differences |
| $ | 83,050,000 |
| $ | 81,318,000 |
Interest rate swaps |
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| 1,799,000 |
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| 2,173,000 |
Property tax method |
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| 1,860,000 |
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| 1,324,000 |
Section 481a adjustment |
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| 1,164,000 |
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| — |
Right of use asset |
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| 6,641,000 |
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| 7,350,000 |
Total deferred tax liabilities |
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| 94,514,000 |
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| 92,165,000 |
Deferred tax assets: |
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Insurance reserves |
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| 6,000,000 |
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| 4,929,000 |
Advance payments on purchases contracts |
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| 986,000 |
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| 746,000 |
Vacation accrual |
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| 2,178,000 |
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| 1,959,000 |
Inventory |
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| 688,000 |
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| 1,566,000 |
Deferred compensation |
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| 7,824,000 |
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| 6,986,000 |
Lease liability |
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| 7,010,000 |
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| 7,868,000 |
Other |
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| 4,788,000 |
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| 4,344,000 |
Total deferred tax assets |
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| 29,474,000 |
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| 28,398,000 |
Net deferred tax liabilities |
| $ | 65,040,000 |
| $ | 63,767,000 |
Refundable current income taxes totaling $3.0 million and $16.9 million at September 27, 2025 and September 28, 2024, respectively, are included in the line item “Other current assets” on the Consolidated Balance Sheets.
Income Tax Expense - Income tax expense differs from the amounts computed by applying the statutory federal rates to income before income taxes. The reasons for the differences were as follows:
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| 2025 |
| 2024 |
| 2023 | |||
Federal tax at statutory rate |
| $ | 23,098,000 |
| $ | 29,295,000 |
| $ | 58,396,000 |
State income tax, net of federal tax benefits |
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| 3,237,000 |
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| 3,892,000 |
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| 9,247,000 |
Federal tax credits |
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| (960,000) |
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| (1,239,000) |
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| (1,449,000) |
Other |
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| 970,000 |
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| 2,012,000 |
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| 1,499,000 |
Total |
| $ | 26,345,000 |
| $ | 33,960,000 |
| $ | 67,693,000 |
Current and deferred income tax expense (benefit) was as follows:
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| 2025 |
| 2024 |
| 2023 | |||
Current: |
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Federal |
| $ | 20,498,000 |
| $ | 29,394,000 |
| $ | 61,562,000 |
State |
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| 4,200,000 |
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| 5,898,000 |
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| 12,789,000 |
Total current expense |
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| 24,698,000 |
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| 35,292,000 |
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| 74,351,000 |
Deferred: |
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Federal |
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| 1,722,000 |
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| (565,000) |
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| (5,802,000) |
State |
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| (75,000) |
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| (767,000) |
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| (856,000) |
Total deferred (benefit) expense |
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| 1,647,000 |
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| (1,332,000) |
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| (6,658,000) |
Total expense |
| $ | 26,345,000 |
| $ | 33,960,000 |
| $ | 67,693,000 |
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.