Income Taxes

12 Months Ended

Jan. 03, 2026

The components of income before provision for income taxes are as follows (in thousands):


	Year Ended		Year Ended		Year Ended
	January 3, 2026 (53 weeks)		December 28, 2024 (52 weeks)		December 30, 2023 (52 weeks)
Income before provision for income taxes:
U.S.	$	59,514	$	51,549	$	41,238
Foreign	17,059		14,693		11,050
Total	$	76,573	$	66,242	$	52,288

The provision (benefit) for income taxes consists of the following (in thousands):


	Year Ended		Year Ended		Year Ended
	January 3, 2026 (53 weeks)		December 28, 2024 (52 weeks)		December 30, 2023 (52 weeks)
Currently payable:
Federal	$	14,391	$	12,747	$	11,544
Foreign	4,491		3,959		2,796
State	4,636		5,748		4,101
Total current expense	23,518		22,454		18,441
Deferred:
Federal	(1,490)		(2,295)		(2,963)
Foreign	(396)		146		(1,041)
State	159		(716)		(630)
Total deferred expense (benefit)	(1,727)		(2,865)		(4,634)
Total tax expense	$	21,791	$	19,589	$	13,807

A reconciliation of CRA's tax rates with the federal statutory rate is as follows:


	Year Ended				Year Ended				Year Ended
	January 3, 2026				December 28, 2024				December 30, 2023
U.S. federal statutory tax rate	$	16,080	21.0	%	$	13,911	21.0	%	$	10,980	21.0	%
State and local income taxes, net of federal income tax effect (1) (2) (3)	3,428		4.5		3,776		5.7		2,755		5.3
Foreign tax effects
Brazil
Changes in valuation allowance	—		—		—		—		(788)		(1.5)
Other	23		—		28		—		(300)		(0.6)
Other foreign jurisdictions	490		0.7		993		1.5		522		1.0

Effect of cross border tax laws	(628)		(0.8)		(477)		(0.7)		(414)		(0.8)


Nontaxable or nondeductible items
Executive compensation	1,625		2.1		998		1.5		874		1.7
Other	415		0.5		189		0.3		163		0.3
Changes in unrecognized tax benefits	352		0.5		201		0.3		(35)		(0.1)
Other adjustments	6		—		(30)		—		50		0.1
Effective tax rate	$	21,791	28.5	%	$	19,589	29.6	%	$	13,807	26.4	%

_______________________________

(1)For the fiscal year ended January 3, 2026, state taxes in California, New York, and Illinois made up the majority (greater than 50%) of the tax effect in this category.

(2)For the fiscal year ended December 28, 2024, state taxes in California, Massachusetts, and New York made up the majority (greater than 50%) of the tax effect in this category.

(3)For the fiscal year ended December 30, 2023, state taxes in California, Massachusetts, and Illinois made up the majority (greater than 50%) of the tax effect in this category.

The components of CRA's deferred tax assets and liabilities are as follows (in thousands):


	January 3, 2026		December 28, 2024
Deferred tax assets:
Accrued compensation and related expense	$	21,969	$	20,679
Allowance for doubtful accounts	2,759		2,324
Net operating loss carryforwards	800		693
Lease liabilities	23,808		26,627
Foreign exchange and other	498		540
Total gross deferred tax assets	49,834		50,863
Less: valuation allowance	—		(2)
Total deferred tax assets, net of valuation allowance	49,834		50,861
Deferred tax liabilities:
Goodwill and other intangible asset amortization	6,611		6,109
Right-of-Use assets	19,794		21,311
Property and equipment	5,298		6,912
Prepaids and other	898		1,068
Total deferred tax liabilities	32,601		35,400
Net deferred tax assets	$	17,233	$	15,461

At January 3, 2026, CRA had foreign net operating loss carryforwards of $2.4 million with indefinite life, an increase of $0.4 million from the prior fiscal year-end. The change in the total valuation allowance for the current fiscal year was immaterial.

The aggregate changes in the balances of gross unrecognized tax benefits were as follows (in thousands):


	Fiscal Year		Fiscal Year
	2025		2024
Balance at beginning of period	$	735	$	—

Additions for tax positions taken during prior years			276
Additions for tax positions taken during the current year	342		459
Reductions as a result of a lapse of the applicable statutes of limitations	—		—

Balance at end of the period	$	1,077	$	735

CRA files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. CRA adjusts its unrecognized tax benefits and the associated interest in light of changing facts and circumstances. A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, CRA believes that its unrecognized tax benefits reflect the most likely outcome. At the end of fiscal 2025, accrued interest for uncertain tax positions was immaterial. CRA's total unrecognized tax benefit at the end of fiscal 2025 is $1.1 million. Settlement of any particular position could require the use of cash. Of the total $1.1 million balance at the end of fiscal 2025, a favorable resolution would result in $0.6 million being recognized as a reduction to the effective income tax rate in the period of resolution. There are no unrecognized tax benefits expected to reverse in the next twelve months.

The number of years with open tax audits varies depending on the tax jurisdiction. CRA's major taxing jurisdiction is the United States where CRA is no longer subject to U.S. federal examinations by the Internal Revenue Service for years before fiscal 2022. Within the significant states where CRA is subject to income tax, CRA is no longer subject to examinations by state taxing authorities before fiscal 2021. CRA's United Kingdom ("U.K.") subsidiary's corporate tax returns are no longer subject to examination by His Majesty's Revenue and Customs for years before fiscal 2024.

If amounts are repatriated from certain of our foreign subsidiaries, CRA could be subject to deferred taxes that are a consequence of foreign exchange translation from earnings that are no longer considered permanently reinvested. CRA considers all other undistributed earnings to be indefinitely reinvested. Foreign withholding taxes, estimated to be $0.7 million, have not been recorded for these foreign subsidiaries.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

CRA INTERNATIONAL, INC. 10-K