Natural Grocers by Vitamin Cottage, Inc. Income Taxes Disclosure

16. Income Taxes

 

The following are the components of the provision for income taxes for the years ended September 30, 2025, 2024 and 2023, respectively, dollars in thousands:

 

		Year ended September 30,
		2025				2024				2023
Current federal income tax expense		$	12,575				10,413				5,291
Current state income tax expense			2,516				2,408				1,311
Total current income tax expense			15,091				12,821				6,602
Deferred federal income tax benefit			(2,246	)			(3,283	)			(1,334	)
Deferred state income tax benefit			(362	)			(672	)			(141	)
Total deferred income tax benefit			(2,608	)			(3,955	)			(1,475	)
Total provision for income taxes		$	12,483				8,866				5,127

 

The differences between the United States federal statutory income tax rate and the Company’s effective tax rate are as follows:

 

		Year ended September 30,
		2025				2024				2023
Statutory tax rate			21.0	%			21.0				21.0
State income taxes, net of federal income tax expense			2.9				2.9				3.1
Enhanced food deduction			(1.3	)			(1.9	)			(3.1	)
Deferred tax liability adjustment			0.3				0.8				—
Other, net			(1.7	)			(2.1	)			(2.9	)
Effective tax rate			21.2	%			20.7				18.1

 

Deferred taxes have been classified on the consolidated balance sheets as follows, dollars in thousands:

 

		As of September 30,
		2025				2024
Long-term assets		$	—				—
Long-term liabilities			(7,863	)			(10,471	)
Net deferred tax liabilities		$	(7,863	)			(10,471	)

 

 

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows, dollars in thousands:

 

		As of September 30,
		2025				2024
Deferred tax assets:
Trademarks		$	563				562
Finance lease liabilities			12,132				11,511
Operating lease liabilities			68,881				73,037
Research and experimental expenditures			855				955
Accrued paid time off			802				768
Equity compensation (1)			983				509
Other (1)			791				435
Gross deferred tax assets			85,007				87,777
Deferred tax liabilities:
Property and equipment			(15,790	)			(17,796	)
Finance lease assets			(10,461	)			(9,944	)
Operating lease assets			(63,442	)			(67,426	)
Leasehold improvements			(1,906	)			(1,919	)
Prepaid expenses (1)			(503	)			(635	)
Goodwill (1)			(737	)			(523	)
Other (1)			(31	)			(5	)
Gross deferred tax liabilities			(92,870	)			(98,248	)
Net deferred tax liabilities		$	(7,863	)			(10,471	)

 

⁽¹⁾ Equity compensation, prepaid expenses and goodwill at September 30, 2024 have been reclassified from other to be consistent with the current period presentation.

 

The Company believes that it is more likely than not that it will fully realize all deferred tax assets in the form of future deductions based on the nature of the deductible temporary differences and expected future taxable income.

 

The Company did not utilize any federal income tax loss or tax credit carryforwards for the years ended September 30, 2025, 2024 and 2023. The Company did not utilize any tax effected state income tax loss carryforwards for the years ended September 30, 2025, 2024 and 2023.

 

The Company did not have any uncertain tax positions as of September 30, 2025 and 2024.

 

The Company files income tax returns with federal, state and local tax authorities. With limited exceptions, the Company is no longer subject to federal income tax examinations for fiscal years 2021 and prior and is no longer subject to state and local income tax examinations for fiscal years 2020 and prior.