INSPERITY INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the net deferred tax assets as reflected on the Consolidated Balance Sheets are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of income tax expense are as follows:

The reconciliation of income tax expense computed at U.S. federal statutory tax rates to the reported income tax expense from continuing operations is as follows:

At December 31, 2023, we have net operating loss carryforwards totaling $1.3 million that expire from 2025 to 2030 related to an acquisition that occurred in 2010.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2023, 2022 and 2021, we have no uncertain tax positions, and as a result, have madeno provisions for interest or penalties related to uncertain tax positions. The tax years 2020 through 2022 remain open to examination by the Internal Revenue Service of the United States. The tax years 2019 through 2022 remain open to examination by various state tax authorities.

During 2023, we repurchased or withheld an aggregate of 1,259,109 shares of our common stock, as described below.

Repurchase Program

Our Board of Directors (the “Board”) has authorized a program to repurchase shares of our outstanding common stock (“Repurchase Program”). The purchases may be made from time to time in the open market or directly from stockholders at prevailing market prices based on market conditions and other factors. During 2023,1,062,598 shares were repurchased under the Repurchase Program. On August 1, 2023, we announced that our Board authorized an increase of 2,000,000 shares that may be repurchased under the Repurchase Program. As of December 31, 2023, we were authorized to repurchase an additional 1,969,562 shares under the Repurchase Program.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposes a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. During 2023, we recorded the applicable excise tax in treasury stock as part of the cost basis of stock repurchased and recorded a corresponding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

liability for the excise tax payable in other accrued liabilities in our Consolidated Balance Sheets.

Withheld Shares

During 2023, we withheld 196,511 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock unit awards.

Dividends

The Board declared and paid quarterly dividends as follows:

During 2023 and 2022, we declared and paid dividends totaling $84.2 million and $76.6 million, respectively.

Preferred Stock

At December 31, 2023, 20 million shares of preferred stock were authorized.