CLEAN HARBORS INC

The domestic and foreign components of income before provision for income taxes were as follows (in thousands):

The provision for income taxes consisted of the following (in thousands, except percentages):

The Company's effective income tax rate varied from the amount computed using the statutory federal income tax rate of 21% as follows (in thousands):

The valuation allowance benefits recognized in 2023 are predominantly the result of cumulative profitable earnings at certain US entities with historic State operating losses. As of December 31, 2023, management determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes associated with these State net operating losses are realizable. Therefore, the valuation allowance was reduced accordingly.

The valuation allowance benefits recognized in 2022 were the result of cumulative profitable earnings at certain Canadian entities with historic operating losses. The 2022 earnings were sufficient to utilize substantially all of the net operating losses, and as of December 31, 2022, the Company released any remaining valuation allowances associated with these entities, which were nominal.

The valuation allowance benefits recognized in 2021 were predominately related to taxable earnings in certain Canadian entities that benefited from amounts received under the Canada Emergency Wage Subsidiary. In addition, foreign tax credits that expired in the period presented had full valuation allowances which were also written off, contributing to the valuation allowance benefits in the table above. The foreign tax credit expirations and associated valuation allowance write-offs had no net impact to the provision for income taxes in any year.

The components of the total net deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows (in thousands):

(1)As of December 31, 2023, the net operating loss carryforwards included (i) state net operating loss carryforwards of $229.9 million which will begin to expire in 2024, (ii) federal net operating loss carryforwards of $26.6 million which will begin to expire in 2024 and (iii) foreign net operating loss carryforwards of $83.2 million which will begin to expire in 2024.

(2)As of December 31, 2023, the foreign tax credit carryforwards of $4.4 million will begin to expire in 2024.

The Company previously recognized the U.S. federal income taxes related to the operations in Canada and has not accrued for any remaining undistributed foreign earnings. These amounts continue to be indefinitely reinvested. The amount of tax associated with those unrepatriated earnings is not expected to be material.

A valuation allowance is required to be established when, based on an evaluation of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The components of the total valuation allowance as of December 31, 2023 and 2022 were as follows (in thousands):

The Company files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The Company may be subject to examination by the Internal Revenue Service for calendar years 2018 through 2022. The Company may be subject to examination by Canadian federal and provincial authorities for calendar years 2016 through 2022 and by state and local revenue authorities for calendar years 2017 through 2022. The Company has ongoing U.S., state and local jurisdictional audits, as well as Canadian federal and provincial audits, all of which the Company believes will not result in material liabilities. The Company has not identified any material uncertain tax positions in the periods presented.

(14)EARNINGS PER SHARE

The following are computations of basic and diluted earnings per share (in thousands, except for per share amounts):

The Company included all outstanding performance awards and restricted stock awards in the calculation of diluted earnings per share except for as shown in the table below: