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Under the accounting standards for income taxes, the asset and liability method is used for computing the future income tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns.

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Income tax reserves are determined using the methodology established by accounting standards for income taxes which require companies to assess each income tax position taken using the following two-step approach. A determination is first made as to whether it is more likely than not that the position will be sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the respective tax position.

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As of May 1, 2026, the total reserves for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $10.8 million, $2.2 million and $0.8 million, respectively, for a total of $13.8 million. The uncertain tax liability is reflected in noncurrent other liabilities in the consolidated balance sheet.

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The Company’s reserve for uncertain tax positions is expected to be reduced by $3.0 million in the coming twelve months resulting from expiring statutes of limitations or settlements. As of May 1, 2026, approximately $10.8 million of the reserve for uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions.

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The Company’s 2021 and earlier tax years are not open for further examination by the Internal Revenue Service (“IRS”). The IRS, at its discretion, may choose to examine the Company’s 2022 through 2024 fiscal year income tax filings. The Company has various state income tax examinations that are currently in progress. Generally, with few exceptions, the Company’s 2022 and later tax years remain open for examination by the various state taxing authorities.

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The effective income tax rate for the 13-week period ended May 1, 2026 was 24.9% compared to a rate of 23.4% for the 13-week period ended May 2, 2025. The effective income tax rate was higher for the 13-week period in 2026 than the comparable 13-week period in 2025 primarily due to expired federal tax credits, partially offset by decreased expense from stock-based compensation.

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The Company received a significant income tax benefit from wages paid to certain newly hired employees who qualified for federal jobs credits, principally the Work Opportunity Tax Credit (“WOTC”), in prior periods. The WOTC program previously authorized under the Consolidated Appropriations Act of 2021 expired for employees hired after

December 31, 2025. For the 13-week period ended May 1, 2026, the expiration of the WOTC program negatively impacted our effective tax rate and, absent reauthorization, will continue to negatively impact future quarters.

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The Organization of Economic Cooperation and Development proposed a global minimum tax of 15% on a country-by-country basis (“Pillar Two”). Pursuant to Pillar Two, countries have enacted minimum tax rates of 15% effective for the 2024 tax year while other countries have enacted proposed legislation making the 15% minimum tax rate effective for the 2025 tax year or later. The Company operates in a country that enacted the 15% minimum tax rate beginning in 2025. The minimum tax did not have a material impact on tax expense on an annual basis.

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The One Big Beautiful Bill Act (“OBBBA”), which was enacted on July 4, 2025, provides full bonus depreciation for certain assets placed into service after January 19, 2025, as well as an election to expense U.S. incurred research or experimental expenditures. The impact of OBBBA significantly decreased our U.S. cash taxes in 2025 but had no material impact to our effective tax rate.