On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law. The Tax Act, among other changes, reduced the statutory federal corporate income tax rate from 35% to 21% effective January 1, 2018. The Tax Act also included a number of other provisions including the elimination of net operating loss carrybacks and limitations on the use of future losses and the repeal of the domestic production activities deduction, among others.


	Year Ended December 31,
	2019		2018		2017
Current income taxes:
Federal	$	10,343	$	13,704	$	22,533
State	2,478		2,255		2,550
Total	12,821		15,959		25,083
Deferred income taxes:
Federal	1,182		1,466		1,576
State	500		(18)		64
Total	1,682		1,448		1,640
Total income tax provision	$	14,503	$	17,407	$	26,723

Deferred income taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows at December 31 (in thousands):


	2019		2018
Deferred tax assets:
Stock-based compensation	$	983	$	1,156
Federal benefit of state uncertain tax positions	746		954
Accrued vacation	521		550
Deferred rent	95		81
State net operating loss carryforwards	228		272
Allowance for doubtful accounts	311		240
Right of use lease liability	2,840		—
Other	465		662
Gross deferred tax assets	6,189		3,915
Less: Valuation allowance	(335)		(367)
Total deferred tax assets	5,854		3,548
Deferred tax liabilities:
Property and equipment	(2,027)		(1,834)
Capitalized software development costs	(3,544)		(2,495)
Right of use lease asset	(2,746)		—
Total deferred tax liabilities	(8,317)		(4,329)
Net deferred tax (liability) asset	$	(2,463)	$	(781)

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company has identified certain estimated state net operating loss (“NOL”) carryforwards that it might be unable to use. Based on a review of applicable state tax statutes, the Company concluded that there is substantial doubt it would be able to realize the full amount of certain

estimated NOL carryforwards in states where the Company cannot file a consolidated income tax return or where future taxable income will not be sufficient to utilize the state NOL before it expires. As a result, the Company recorded a deferred tax asset valuation allowance of $0.3 million and $0.4 million at December 31, 2019 and 2018, respectively.

The following table reconciles the statutory federal income tax rate and the effective income tax rate indicated by the consolidated statements of income:


	Year Ended December 31,
	2019		2018		2017
Statutory federal income tax rate	21.0	%	21.0	%	35.0	%
Domestic production activities deductions	—	%	—	%	(2.6)	%
Federal and state tax credits	(0.8)	%	(2.3)	%	(2.0)	%
Tax deficit (benefit) from restricted stock vestings	(0.1)	%	0.3	%	(0.7)	%
State income taxes	5.0	%	2.3	%	1.8	%
Uncertain tax positions (release)	(5.2)	%	0.8	%	1.6	%
Nondeductible expenses	2.2	%	0.8	%	0.7	%
Other, net	0.2	%	0.1	%	0.3	%
Effective federal and state income tax rate	22.3	%	23.0	%	34.1	%

The Company’s effective tax rate in 2019 was higher than the statutory federal income tax rate due to the effect of state income taxes and nondeductible expenses, partially offset by the favorable impact of the release of reserves for unrecognized income tax benefits resulting from the expiration of the statutes of limitations for certain tax years and from the completion of an IRS tax examination of the Company’s 2016 consolidated U.S. federal income tax return, which resulted in no changes to the Company’s previously filed return. The effective tax rate was also impacted by approximately $2.6 million of executive severance costs, a significant portion of which is not deductible for income tax purposes.

The Company’s effective tax rate in 2018 was higher than the statutory federal income tax rate due to the effect of state income taxes, uncertain tax positions, and nondeductible expenses, partially offset by favorable benefits related to the federal research and development credit.

The Company's effective tax rate in 2017 was lower than the statutory federal income tax rate due mainly to favorable benefits related to the domestic production activities deduction, the federal research and development credit, and excess tax benefits from restricted stock vestings.

The Company recognized $0.1 million and $0.3 million in tax deficits and $0.5 million in excess tax benefits from restricted stock vestings within income tax expense for the years ended December 31, 2019, 2018 and 2017, respectively.

The following table provides a reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits (included in other long-term liabilities in the consolidated balance sheets) for the years ended December 31, 2019, 2018 and 2017 (in thousands):


	2019		2018		2017
Balance at January 1	$	8,651	$	8,020	$	6,599
Additions for tax positions of prior years	208		459		576
Additions for tax positions of current years	393		1,248		1,646
Expiration of the statute of limitations	(3,182)		(1,024)		(788)
Reductions for tax positions of prior years	(217)		(52)		(13)
Settlements	(805)		—		—
Balance at December 31	$	5,048	$	8,651	$	8,020

The decrease in the amount of the consolidated liability for unrecognized income tax benefits in 2019 was mainly due to the release of reserves for unrecognized income tax benefits described above.

At December 31, 2019 and 2018, there were approximately $4.3 million and $7.7 million, respectively, of unrecognized tax benefits that if recognized would affect the Company’s annual effective tax rate. It is reasonably possible that events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits to increase or decrease. However, the Company does not expect such increases or decreases to be material to its financial condition or results of operations.

The Company, along with its wholly owned subsidiaries, files a consolidated U.S. federal income tax return and separate income tax returns in many states throughout the U.S. The Company remains subject to U.S. federal examination for the tax years ended on or after December 31, 2017. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return.

The Company recognizes accrued interest and penalties associated with uncertain tax positions as part of income tax expense in the consolidated statements of income. Accrued interest and penalty amounts were not significant at December 31, 2019, 2018 and 2017.