Dollar General 2012 Annual Report Download - page 148
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10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Income taxes (Continued)
A reconciliation between actual income taxes and amounts computed by applying the federal
statutory rate to income before income taxes is summarized as follows:
(Dollars in thousands) 2012 2011 2010
U.S. federal statutory rate on earnings before
income taxes ........................ $524,088 35.0% $428,851 35.0% $344,740 35.0%
State income taxes, net of federal income tax
benefit ............................ 52,713 3.5 42,774 3.5 26,877 2.7
Jobs credits, net of federal income taxes ..... (16,062) (1.1) (15,153) (1.2) (8,845) (0.9)
Increase (decrease) in valuation allowances . . . (3,050) (0.2) (2,202) (0.2) (1,003) (0.1)
Income tax related interest expense (benefit),
net of federal income taxes ............. (476) — (121) — (5,004) (0.5)
Reduction in income tax reserves due to
favorable examination resolutions ......... (13,676) (0.9) — — — —
Other, net ........................... 1,195 0.1 4,455 0.3 350 0.1
$544,732 36.4% $458,604 37.4% $357,115 36.3%
The 2012 effective tax rate was an expense of 36.4%. This expense was greater than the federal
statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax
rate. The 2012 effective tax rate of 36.4% was lower than the 2011 rate of 37.4% due to the favorable
resolution of a federal income tax examination during 2012.
The 2011 effective tax rate was an expense of 37.4%. This expense was greater than the federal
statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax
rate. The 2011 effective rate was greater than the 2010 rate of 36.3% primarily due to the effective
resolution of various examinations by the taxing authorities in 2010 that did not reoccur, to the same
extent, in 2011. These factors resulted in rate increases in 2011, as compared to 2010, associated with
state income taxes and income tax related interest expense. Increases in federal jobs related tax credits,
primarily due to the Hire Act’s Retention Credit, reduced the effective rate in 2011 as compared to
2010. The Retention Credit applies only to 2011.
The 2010 effective tax rate was an expense of 36.3%. This expense was greater than the federal
statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax
rate.
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