YETI Holdings Inc

13. INCOME TAXES

The components of income before income taxes were as follows for the periods indicated (in thousands):

The components of income tax expense were as follows for the periods indicated (in thousands):

A reconciliation of income taxes computed at the federal statutory income tax rate of 21% to the effective income tax rate is as follows for the periods indicated (in thousands):

Deferred tax assets and liabilities consisted of the following for the periods indicated (in thousands):

We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes have been recognized on such earnings except for the transition tax recognized as part of the Tax Cuts and Jobs Act (“the Tax Act”) during 2017. We continue to evaluate our plans for reinvestment or repatriation of unremitted foreign earnings. If we determine that all or a portion of our foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes. We believe it is not practicable to estimate the amount of additional taxes, which may be payable upon distribution of these earnings. At December 28, 2024, we had unremitted earnings of foreign subsidiaries of $51.0 million.

The Tax Act introduced new provisions for U.S. taxation of certain global intangible low-taxed income (“GILTI”). We elected to account for the tax on GILTI as a period cost and therefore have not recorded deferred taxes related to GILTI on our foreign subsidiaries.

As of December 28, 2024, we had Texas research and development tax credit carryforwards of approximately $2.3 million, which if not utilized will expire beginning in 2039.

The following table summarizes the activity related to our unrecognized tax benefits for the periods indicated (excluding interest and penalties) (in thousands):

If our positions are sustained by the relevant taxing authorities, approximately $16.9 million (excluding interest and penalties) of uncertain tax position liabilities as of December 28, 2024 would favorably impact our effective tax rate in future periods. We do not anticipate that the balance of gross unrecognized tax benefits will change significantly during the next twelve months.

We include interest and penalties related to unrecognized tax benefits in our current provision for income taxes in the accompanying consolidated statements of operations. As of December 28, 2024, we had recognized a liability of $4.3 million for interest and penalties related to unrecognized tax benefits.

We file income tax returns in the United States and various state and foreign jurisdictions. The tax years 2021 through 2024 remain open to examination in the United States, and the tax years 2016 through 2024 remain open to examination in Texas. The tax years 2020 through 2024 remain open to examination in most other state and foreign jurisdictions.

The Organization for Economic Co-operation and Development enacted model rules for a new global minimum tax framework, also known as Pillar Two, and certain governments globally have enacted, or are in the process of enacting, legislation to address Pillar Two. As of December 28, 2024, the impact of Pillar Two on our consolidated financial statements was not material.