Income Taxes

The components of income tax expense for the years ended December 31, 2014, 2015 and 2016 were as follows (in thousands):



	2014			2015			2016

Current income tax expense:
Federal	$	19,404		$	17,910		$	13,518
State	3,252			2,322			1,877
	22,656			20,232			15,395
Deferred tax expense:
Federal	2,623			(241		)	(424		)
State	(129		)	81			(31		)
	2,494			(160		)	(455		)
Income Tax Expense	$	25,150		$	20,072		$	14,940

The tax effects of principal temporary differences are as follows (in thousands):



	2015			2016

Deferred tax assets:
Stock option compensation expense	$	1,336		$	1,057
Allowance for doubtful accounts	4,988			3,079
Accrued vacation and severance	576			798
Restricted stock	1,830			1,874
Investment	19			168
	8,749			6,976
Deferred tax liabilities:
Income tax deductible capitalized software development costs	(11,275		)	(11,827		)
Property and equipment	(4,688		)	(2,208		)
Prepaid expenses	(2,016		)	(1,716		)
	(17,979		)	(15,751		)
Deferred tax liabilities, net	$	(9,230	)	$	(8,775	)

Income tax expense differs from the amount of tax determined by applying the United States Federal income tax rates to pretax income and loss due to permanent tax differences, and the application of state apportionment laws, as follows (in thousands):



	2014					2015					2016
	Amount			%		Amount			%		Amount			%

Tax expense at statutory rate	$	23,110		35.00	%	$	18,370		35.00	%	$	13,683		35.00	%
State taxes, net	1,985			3.01	%	1,590			3.03	%	1,278			3.27	%
Permanent differences	228			0.35	%	278			0.53	%	221			0.56	%
Other	(173		)	(0.27	)%	(166		)	(0.32	)%	(242		)	(0.62	)%
	$	25,150		38.09	%	$	20,072		38.24	%	$	14,940		38.21	%

Permanent differences in the table above are mainly attributable to minority investment earnings and/or losses, nondeductible meals and entertainment expenses, and non-deductible employer contributions to the American Public Education, Inc. Employee Stock Purchase Plan, or ESPP.

The Company is subject to U.S. federal income taxes as well as income tax of multiple state jurisdictions. For U.S. federal and state tax purposes, tax years 2013-2016 remain open to examination.