v3.26.1
Income Taxes
 12 Months Ended
Mar. 28, 2026
Income Taxes [Abstract]  
Income Taxes Note 8 – Income Taxes

Income (loss) before income taxes were $3.1 million, $(5.9) million and $51.9 million during 2026, 2025 and 2024 respectively.

In December 2023, the FASB issued new accounting guidance ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires income tax disclosure updates, primarily by requiring specific categories and greater disaggregation within the rate reconciliation and income taxes paid by jurisdiction. We adopted the standard prospectively in fiscal 2026.

Income Tax Rate Reconciliation

2026

(dollars in thousands)

Amount

Percentage

U.S. federal statutory rate

$

651

21.0

%

State income taxes, net of federal tax benefit (a)

1,028

33.2

Tax credits

(667)

(21.5)

Nontaxable or nondeductible items (b)

844

27.2

Changes in unrecognized tax benefits

(1,105)

(35.7)

Other

176

5.7

Effective tax rate

$

927

29.9

%

(a)State and local taxes in Delaware, North Carolina and Louisville make up the majority (greater than 50%) of the tax effect of the state and local income tax category.

(b)Tax expense of $661 related to nondeductible share-based compensation is classified within nontaxable or non-deductible items in the effective tax rate reconciliation for 2026.

Income Tax Rate Reconciliation for years prior to the adoption of ASU 2023-09

2025

2024

Percent

Percent

Expected U.S. federal income taxes at statutory rate

21.0

%

21.0

%

State income taxes, net of federal tax benefit

8.0

5.3

Tax adjustments

(7.0)

0.3

Valuation allowance

(7.5)

0.3

Share-based compensation

(8.1)

1.0

Tax credits

9.4

(1.1)

Nondeductible items

(4.0)

0.9

Other

0.6

(0.1)

Effective tax rate

12.4

%

27.6

%

Provision for (Benefit from) Income Taxes

(thousands)

2026

2025

2024

Current:

Federal

$

—

$

(731)

$

4,910

State

51

(139)

368

Total current

51

(870)

5,278

Deferred:

Federal

990

(9)

5,649

State

(114)

148

3,382

Total deferred

876

139

9,031

Total provision for (benefit from) income taxes

$

927

$

(731)

$

14,309

Income Tax Paid, Net of Refunds

(thousands)

2026

Federal Taxes

$

—

State taxes:

New Jersey

108

New York

99

Other

34

Total income taxes paid

$

241

We made cash payments of $4.0 million and $5.3 million for income taxes, net of refunds, during 2025 and 2024, respectively. Due to deferred tax effects and other payment and refund timing differences, income tax payments are not necessarily indicative of our current tax expense or future cash obligations.

Net Deferred Tax Asset/(Liability)

(thousands)

March 28, 2026

March 29, 2025

Gross deferred tax assets:

Lease liabilities

$

130,273

$

143,627

Federal loss carryforward

13,180

1,675

Insurance accrual

9,950

10,590

Other

28,169

21,195

Total gross deferred tax assets

181,572

177,087

Valuation allowance

(587)

(595)

Total gross deferred tax assets

180,985

176,492

Gross deferred tax liabilities:

Leased assets

(102,942)

(109,156)

Goodwill

(99,042)

(89,572)

Other

(17,166)

(14,875)

Total gross deferred tax liabilities

(219,150)

(213,603)

Total net deferred tax liability

$

(38,165)

$

(37,111)

We have $13.2 million and $12.3 million of federal and state net operating loss carryforwards, respectively, available as of March 28, 2026. The federal net operating loss carryforward has an unlimited carryforward period, and the state net operating loss carryforward periods expire in varying amounts through 2046.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of March 28, 2026, we concluded, based on the weight of all available positive and negative evidence, that most of our deferred tax assets are more likely than not to be realized, except the estimated amount of future state net operating loss assets in certain jurisdictions that will expire unutilized.

Reconciliation of Gross Unrecognized Tax Benefits

(thousands)

2026

2025

2024

Balance at beginning of period

$

1,399

$

2,385

$

3,709

Additions for tax positions of prior years

—

404

67

Reductions for tax positions of prior years

(391)

—

—

Settlements for tax positions of prior years

—

(675)

—

Lapse in statutes of limitation

(1,008)

(715)

(1,391)

Balance at end of period

$

—

$

1,399

$

2,385

We did not have any unrecognized tax benefits as of March 28, 2026. The total amount of unrecognized tax benefits was $1.4 million and $2.4 million as of March 29, 2025 and March 30, 2024, respectively, the majority of which, if recognized, would affect the effective tax rate.

In the normal course of business, Monro provides for uncertain tax positions and the related interest and penalties and adjusts its unrecognized tax benefits and accrued interest and penalties accordingly. We did not have any interest and penalties associated with uncertain tax benefits accrued as of March 28, 2026 and March 29, 2025.

We file U.S. federal income tax returns and income tax returns in certain state jurisdictions. Our U.S. federal income tax returns for 2023 – 2025 and various state tax years remain subject to income tax examinations by tax authorities.