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Federal Income Tax
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Federal Income Tax FEDERAL INCOME TAX
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100 percent of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company has considered the implications of the CARES Act on its tax provision and has included an income tax benefit of $18,562 as the result of this Act in 2020.
Federal income tax expense (benefit) is composed of the following:
   
Years Ended December 31,202220212020
Current$1,627 $11,081 $(46,861)
Deferred(4,581)5,168 (9,948)
Total$(2,954)$16,249 $(56,809)

A reconciliation of income tax expense (benefit) computed at the applicable federal tax rate of 21.0 percent in 2022, 2021 and 2020 to the amount recorded in the accompanying Consolidated Statements of Income and Comprehensive Income is as follows:
   
Years Ended December 31,202220212020
Computed expected income tax expense (benefit)$2,536 $20,337 $(35,598)
The CARES Act— — (18,562)
Tax-exempt municipal bond interest income(3,115)(3,412)(3,669)
Nontaxable dividend income(378)(361)(517)
Goodwill impairment— — 3,169 
Compensation582 770 695 
Research & development credit(1,591)(1,545)(2,045)
Other, net(988)460 (282)
Consolidated federal income tax expense (benefit)$(2,954)$16,249 $(56,809)

We measure certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is 21.0 percent. The significant components of our net deferred tax liability at December 31, 2022 and 2021 are as follows:
  
December 31,20222021
Deferred tax liabilities
Net unrealized appreciation on investment securities:
  Equity securities$19,701 $27,047 
  All other securities— 13,229 
Deferred policy acquisition costs21,887 19,204 
Investments in partnerships1,303 3,229 
Over funded pension benefit232 1,214 
Prepaid pension cost5,653 3,725 
Net bond discount accretion238 323 
Depreciation3,996 4,097 
Revaluation of investment basis (1)119 — 
Identifiable intangible assets (1)1,093 1,242 
Capitalized Software3,607 6,351 
Other1,550 2,183 
Gross deferred tax liability59,379 $81,844 
Deferred tax assets
Financial statement reserves in excess of income tax reserves$22,522 $22,879 
Unearned premium adjustment18,513 17,296 
Employee profit sharing1,624 2,515 
Post-retirement benefits other than pensions2,650 
Other-than-temporary impairment of investments1,109 1,529 
Compensation expense related to stock options1,822 1,989 
Nonqualified deferred compensation2,399 2,574 
Net Unrealized Appreciation - all other securities23,382 
Other3,539 3,659 
Gross deferred tax asset$74,910 $55,091 
Valuation allowance— — 
Deferred tax asset$74,910 $55,091 
Net deferred tax liability (asset)$(15,531)$26,753 
(1) Related to our acquisition of Mercer Insurance Group, Inc.
Deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred taxes will not be realized. After considering all positive and negative evidence of taxable income in the carryback and carryforward periods and our tax planning strategy of holding debt securities with unrealized losses to maturity or recovery, we believe it is more likely than not that all the deferred assets will be realized. As a result, we have no valuation allowance at December 31, 2022 and 2021.