10. Income Taxes

The provision for income tax expense (benefit) consists of the following:



	Year ended December 31
	2016		2015		2014
Current:
Federal	$	16,664	$	15,298	$	17,347
State		1,866		2,057		1,774
		18,530		17,355		19,121
Deferred:
Federal		4,930		6,103		2,025
State		1,227		(1,371)		890
		6,157		4,732		2,915
	$	24,687	$	22,087	$	22,036

A reconciliation of income tax expense computed at the federal statutory rate to the provision for income taxes for the years ended December 31, 2016, 2015 and 2014 is as follows:



	2016		2015		2014
Federal income tax expense at statutory rate	$	22,294	$	23,192	$	21,699
State taxes, net of federal benefit		2,547		1,077		1,694
Valuation allowance changes		(7)		(1,028)		-
Change in uncertain tax positions, net		50		43		8
Research and development credit		(274)		(241)		(249)
Rate change		64		(30)		366
Manufacturing tax benefits		(1,248)		(1,302)		(1,612)
Prior period adjustments		1,096		-		-
Other		165		376		130
	$	24,687	$	22,087	$	22,036

Significant components of the Company’s deferred tax liabilities and assets are as follows:



	December 31,
	2016		2015
Deferred tax assets:
Allowance for doubtful accounts	$	393	$	492
Inventory reserves		1,111		928
Warranty liability		2,244		2,717
Deferred compensation		548		733
Earnout liabilities		242		1,367
Pension and retiree health benefit obligations		5,432		3,375
Accrued vacation		866		720
Medical claims reserve		72		75
State net operating losses		2,853		3,164
Other accrued liabilities		2,967		3,229
Valuation allowance for state net operating losses		(640)		(647)
Total deferred tax assets		16,088		16,153
Deferred tax liabilities:
Tax deductible goodwill and other intangibles		(63,324)		(57,496)
Accelerated depreciation		(7,176)		(7,239)
Other		(151)		(196)
Total deferred tax liabilities		(70,651)		(64,931)
Net deferred tax liabilities	$	(54,563)	$	(48,778)

Deferred income tax balances reflect the effects of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.

State operating loss carry forwards for tax purposes will result in future tax benefits of approximately $2,853. These loss carry-forwards will begin to expire in 2021. The Company evaluated the need to maintain a valuation allowance against certain deferred tax assets. Based on this evaluation, which included a review of recent profitability, future projections of profitability, and future deferred tax liabilities, the Company concluded that a valuation allowance of approximately $640 is necessary at December 31, 2016 for the state net operating loss carry-forwards which are likely to expire prior to the Company's ability to use the tax benefit.

A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:



	2016		2015
Balance at beginning of year	$	490	$	464
Increases for tax positions taken in the current year		73		26
Increases for tax positions taken in the prior years		1,809		-
Decreases due to settlements with taxing authorities		(11)		-
Balance at the end of year	$	2,361	$	490

The above uncertain tax position rollforward was updated in the year ended December 31, 2016 to remove amounts related to interest and penalties for the year ended December 31, 2015. The amount of the unrecognized tax benefits that would affect the effective tax rate, if recognized, was approximately $438 at December 31, 2016. The Company recognizes interest and penalties related to the unrecognized tax benefits in income tax expense. Approximately $79 and $110 of accrued interest and penalties is reported as an income tax liability at December 31, 2016 and 2015, respectively. The liability for unrecognized tax benefits is reported in Other Long‑term Liabilities on the consolidated balance sheets at December 31, 2016 and 2015.

The Company files income tax returns in the United States (federal), Wisconsin (state), Maine (state) and various other states. Tax years open to examination by tax authorities under the statute of limitations include 2013, 2014 and 2015 for Federal and 2012 through 2015 for most states. Tax returns for the 2016 tax year have not yet been filed.