The reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is as follows:

	Year Ended December 31,
	2019			2018			2017
Tax at statutory rates		21.0	%		21.0	%		35.0	%
State income taxes		2.6			3.6			6.5
Permanent differences		(1.2	)		(0.6	)		(2.5	)
Research and development credits		1.0			1.0			1.5
US tax rate change		—			-			(52.7	)
Change in valuation allowance		(23.4	)		(25.0	)		12.2
Effective tax rate		0.0	%		0.0	%		0.0	%

The significant components of the Company’s deferred tax asset consist of the following at December 31, 2019 and 2018 (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	86,990		$	73,612
Tax credits		8,329			7,603
Other temporary differences		2,888			3,156
Start-up expenditures		2,716			3,026
Stock option expenses		3,450			3,130
Lease liability		987			—
Total deferred tax assets		105,360			90,527
Deferred tax asset valuation allowance		(104,204	)		(90,361	)
Net deferred tax assets		1,156			166
Deferred tax liabilities:
Right of use asset		(859	)		—
Prepaid expenses		(297	)		(166	)
Net deferred taxes	$	—		$	—

In 2019 and 2018, the Company did not record a benefit for income taxes related to its operating losses incurred. ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences, and as a result the Company continues to maintain a valuation allowance for the full amount of the 2019 deferred tax assets. The valuation allowance increased by $13.8 million and increased $12.8 million for the years ended December 31, 2019 and 2018, respectively. The increase in the 2019 valuation allowance is primarily attributable to the current year loss. The increase in 2018 was primarily attributable to the loss incurred for the year.

As of December 31, 2019, the Company had federal and state net operating losses of $329.6 million and $292.4 million, respectively, which are available to offset future taxable income, if any, of which $228.2 million of federal and $288.0 million of state carry forwards will expire in varying amounts through 2037 and 2039, respectively. Additionally, $101.4 million of federal net operating loss carry forwards and $4.4 million of state net operating loss carryforwards will carryforward indefinitely, subject to annual taxable income limitations in the year of utilization. The Company also had federal and state research and development tax credits of $5.5 million and $3.6 million, respectively, which expire at various dates through 2039 for federal purposes and 2034 for state purposes. Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future. The Company has not conducted an assessment to determine whether there may have been a Section 382 or 383 ownership change.

The Company has no unrecognized tax benefits. Interest and penalty charges, if any, related to uncertain tax positions would be classified as income tax expenses in the accompanying consolidated statements of operations. At December 31, 2019 and 2018, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the U.S. federal tax jurisdiction and various state jurisdictions. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available. The Company does not have any international operations as of December 31, 2019. The statute of limitations for assessment by federal and state tax jurisdictions in which the Company has business operations is open for tax years ending December 31, 2016 and after. The tax years under examination vary by jurisdiction.