Income Taxes

The components of income tax expense for the years ended December 31, 2017, 2018 and 2019 were as follows (in thousands):



	2017			2018			2019

Current income tax expense:
Federal	$	11,989		$	8,034		$	5,803
State	1,998			2,170			1,425
	13,987			10,204			7,228
Deferred tax expense:
Federal	(2,810		)	(776		)	(1,766		)
State	316			(141		)	(275		)
	(2,494		)	(917		)	(2,041		)
Income Tax Expense	$	11,493		$	9,287		$	5,187

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



	2018			2019

Deferred tax assets
Operating lease liability	$	—		$	2,912
Allowance for doubtful accounts	1,637			1,528
Restricted stock	1,625			1,232
Accrued vacation and severance	571			660
Investment	35			304
Other	32			232
Deferred rent	71			—
Stock option compensation expense	—			1
Total deferred tax assets	3,971			6,869
Deferred tax liabilities
Income tax deductible capitalized software development costs	(4,701		)	(3,330		)
Operating lease asset	—			(2,882		)
Property and equipment	(1,484		)	(1,670		)
Prepaid expenses	(1,259		)	(1,607		)
Goodwill and intangibles	(1,891		)	(771		)
Total deferred tax liabilities	(9,335		)	(10,260		)
Deferred tax liabilities, net	$	(5,364	)	$	(3,391	)

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 the application of state apportionment laws, permanent tax differences, and the impact of the change in the federal statutory rate as follows (in thousands):



	2017					2018					2019
	Amount			%		Amount			%		Amount			%

Tax expense at statutory rate	$	11,415		35.00	%	$	7,320		21.00	%	$	3,192		21.00	%
State taxes, net	1,626			4.98	%	1,575			4.51	%	852			5.60	%
Permanent differences	2,060			6.31	%	433			1.24	%	244			1.61	%
Change in statutory rate	(3,741		)	(11.47	)%	—			—	%	—			—	%
Equity-based compensation benefits	—			—	%	(126		)	(0.36	)%	371			2.44	%
Post-employment benefits	—			—	%	—			—	%	345			2.27	%
Uncertain tax position	—			—	%	154			0.44	%	93			0.61	%
Valuation allowance on capital loss	—			—	%	—			—	%	213			1.40	%
Other	133			0.42	%	(69		)	(0.19	)%	(123		)	(0.80	)%
	$	11,493		35.24	%	$	9,287		26.64	%	$	5,187		34.13	%

On December 22, 2017 the Tax Act was enacted by the U.S. government. Among other provisions, the Tax Act reduced the federal corporate tax rate to 21% from the existing maximum rate of 35%, effective January 1, 2018. The Company recorded a tax benefit of $3.7 million related to the revaluation of its net deferred tax liabilities for the year ended December 31, 2017.

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

There were no material uncertain tax positions as of December 31, 2017, 2018 or 2019. Interest and penalties associated with uncertain income tax positions would be classified as income tax expense. The Company has not recorded any material interest or penalties during any of the years presented.

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 2016-2018 remain open to examination.